Microsoft Corporation MSFT is among the tech stalwarts that have made gains during the pandemic, and a Wedbush analyst says the company's outperformance is likely to continue.
The Microsoft Analyst: Daniel Ives has an Outperform rating on Microsoft shares with a $260 price target.
The Microsoft Thesis: Strong cloud deal activity around Azure in the field during the September quarter points to another beat-and-raise quarter for the software giant, Ives said in a note.
The company is scheduled to release its fiscal year 2021 first-quarter results after the market close Oct. 27.
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The analyst projects Azure growth to land in the 50% range as the work-from-home environment catalyzes more enterprises to make the strategic cloud shift.
Many firms are accelerating digital transformation and cloud strategy with Microsoft by six to 12 months due to the likelihood of a heavy remote workforce in the foreseeable future, he said.
"Azure's cloud momentum is still in its early days of playing out within the company's massive installed base and the Office 365 transition for both consumer/enterprise is providing growth tailwinds over the next few years," Ives said.
Wedbush continues to believe Microsoft is the core cloud name to play this transformational secular trend, the analyst said.
Microsoft continues to lead a transformational cloud story, narrowing the gap vs. Amazon.com, Inc.'s AMZN AWS heading into 2021, he said.
MSFT Price Action: Microsoft shares were up 0.25% at $214.76 ahead of the close Tuesday.
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