The Microsoft Analyst
Ives has an “outperform” rating on the Satya Nadella-led company with a 12-month price target of $375.The Microsoft Thesis
Writing ahead of Microsoft’s second-quarter earnings due Tuesday, Ives said—based on Wedbush’s research—he believes the Redmond, Washington-headquartered company saw another robust performance in the December quarter.The growth was led by Microsoft’s Azure/Office 365 segments. Ives expects to see a nearly 3 percent top-line beat.
The analyst said the Street is looking for total revenue and EPS of $50.9 billion and $2.31 in the second quarter.
In the first quarter, Microsoft’s earnings per share amounted to $2.27, while revenue came in at $45.32 billion.
The tech giant is on track to beat Azure whisper growth numbers of nearly 43 percent this quarter, as per Ives.
“We believe large transformational cloud deals at MSFT are up north of 50 percent with clear momentum in 2022 and also some incremental share gains from AWS could be in the cards,” said Ives, in the note seen by Benzinga.
Deal flow is “incrementally strong,” as per Ives, especially of Office 365/Azure deals as the company heads into 2022. As per Wedbush estimates, Microsoft is still only approximately 35 percent through penetrating its installed base in cloud transition.
The Office 365 price hikes for 2022 were termed a “smart strategic poker move” by the Wedbush analyst. He said this could constitute a more than $5 billion incremental tailwind for the company.
The “cloud shift” benefits Microsoft in a disproportional manner as the company is at an advantage to further deploy its Azure/Office 365 as the “cloud backbone and artery,” as per Ives.
Digital transformation was termed a $1 trillion total addressable market by the analyst as enterprise workloads on the cloud rise from 44 percent today to 55 percent by the end of 2022.
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