Channel checks indicate strong cloud deal activity related to Microsoft’s Corporation MSFT Azure over the past month, with the work-from-home environment pushing more enterprises to shift all operations to the cloud, according to Wedbush.
The Microsoft Analyst: Daniel Ives maintained an Outperform rating for Microsoft, with a price target of $220. He raised the bull case to $275, saying it reflects “increased confidence in the transformational cloud story in Redmond.”
The Microsoft Thesis: Many enterprises are accelerating their digital transformation and cloud strategy with Microsoft by six to 12 months, as the need to support a largely remote workforce is now likely for the foreseeable future, Ives said in the note.
Azure's cloud momentum is yet to pick up pace within the company’s massive installed base, while the transition to Office 365 by consumers and enterprises provides growth tailwinds for the next few years.
Although an economic recessionary environment could impact cloud deployments, Ives said many companies are prioritizing their cloud shift and have allocated the budget for this, which should allow Microsoft to meet near-term expectations.
He added that as Microsoft moves into its September and December quarters, expectations of an economic recovery could propel the company’s growth.
MSFT Price Action: Shares of Microsoft traded around $186.32 at the time of publication Friday.
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