It’s business as usual for Microsoft (MSFT) in 2021, with the stock on an almost constant steady upward trajectory.
Looking ahead, Tigress analyst Ivan Feinseth expects the good times to continue, claiming the “ongoing digital transformation, increasing cloud strength and new product introductions will continue to drive significant revenue and Economic Profit growth.”
In fact, the 5-star analyst not only reiterated a Buy rating for MSFT stock but also increased the price target from $303 to $366, implying upside of 24% from current levels. (To watch Feinseth’s track record, click here)
There are multiple reasons for Feinseth’s bullish outlook, one of which is the rare occurrence of an upgrade to the tech giant’s PC operating system. The roll out of Windows 11 will begin on October 5th, the first major upgrade in over six years.
“The new Windows version will kick off a major PC and software upgrade cycle and provide integration to MSFT’s upcoming Windows 365 cloud-hosted computer-as-a-service platform,” the analyst says.
Windows 365 is the company’s “latest evolution” of a complete transition to the Cloud and offers a “complete cloud-hosted computing experience.” It also provides “increased security” and allows users to stream access to all applications, tools and data “on any device.” What’s more, in the current WFH environment, enterprises can support remote employees, including seasonal, temporary, intern, and contract workers. Feinseth says cloud migration, increasing employment trends, and “strong pricing power” will continue to favor Microsoft and notes that even moderate price hikes can drive meaningful revenue growth and “gains in profitability.”
But that’s not all. Microsoft is also a force to be reckoned with in gaming. Expanding on its successful Game Pass subscription service, later this year, MSFT will integrate its Xbox consoles into the Xbox Cloud Gaming streaming service, adding further optionality on top of mobile devices and desktop PCs.
Feinseth says Xbox Cloud “negates the need for game downloads,” noting CEO Satya Nadella has called it a “breakthrough experience.”
And finally, the cherry on top is the company’s stellar balance sheet, which at the end of 2Q21, boasted $127.96 billion – $17.00 per share – in excess cash.
“We expect MSFT will generate an Economic Operating Cash Flow (EBITDAR) of $124.19 billion over the NTM, which will continue to drive growth initiatives and strategic acquisitions as well as the ongoing return of cash to shareholders,” the analyst buoyantly said.
Evidently, Feinseth’s colleagues also think Microsoft is well-positioned to deliver. The stock has a Strong Buy consensus rating, based on a unanimous 23 Buys. The forecast is for one-year gains of ~14%, given the average price target currently stands at $334.55. (See Microsoft stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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