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Microsoft Corp. was plunged into a massive cybersecurity attack late last year, but the unprecedented intrusion could actually end up being positive for the company’s bottom line.
UBS analyst Karl Keirstead, who has a buy rating and a price target of $ 243, said Microsoft MSFT,
the products were exploited by hackers during the SolarWinds Corp. SWI attack,
Orion IT management software, as it is commonplace, “the broader cybersecurity community is not pointing fingers at Microsoft.”
Keirstead noted that the attack actually drove more customers into public cloud infrastructures like Azure, Amazon.com Inc.’s AMZN,
Alphabet Inc.’s AWS and GOOG,
GOOGL,
Google Cloud “since cloud data centers are more secure and constant patching / updating of on-premise software like Orion presents a security risk that can be transferred to Microsoft, Amazon or Google.”
“Ultimately, we believe this cybersecurity attack could be of modest net benefit to Microsoft,” Keirstead said.
Analysts expect Microsoft’s Intelligent Cloud segment, which includes the company’s Azure public cloud platform, to generate $ 13.77 billion in revenue, up 16% from the period of the year before when Microsoft released its second quarter tax results after Thursday’s bell.
Microsoft only breaks down the percentage gains for Azure over the previous year period without specifying a dollar amount. Azure gains were 59% in the first quarter of fiscal 2021, 47% in the fourth quarter of fiscal 2020, 59% in the third quarter and 62% in the second quarter of last year.
What to expect
Earnings: Of the 28 analysts polled by FactSet, Microsoft is expected to post an average profit of $ 1.64 per share, up from $ 1.61 per share expected at the start of the quarter and $ 1.51 per share in the second quarter of last year. . Estimize, a software platform that uses crowdsourcing from hedge fund executives, brokers, buy-side analysts and others, calls for earnings of $ 1.69 per share.
Returned: Wall Street expects Microsoft’s $ 40.23 billion in revenue, according to 25 analysts polled by FactSet. That’s down from the $ 40.48 billion forecast at the start of the quarter, but up from the $ 40.72 billion reported in the quarter last year. Estimize is forecasting sales of $ 40.72 billion.
Movement of stock: During the end of December quarter, Microsoft stock rose 5.8%, compared to 10.2% on the Dow Jones Industrial Average DJIA,
which includes Microsoft as a component. Likewise, the S&P 500 SPX index,
rose 11.7%, and the highly technological Nasdaq composite index
increased by 15.4%.
What analysts say
Morgan Stanley analyst Keith Weiss, who has an overweight rating and a price target of $ 260, said that if investors can focus on headwinds from Microsoft, he sees an opportunity given the lag in action in the software sector. While Microsoft’s stock has risen 35% in the past 12 months, the IGV iShares Expanded Tech-Software Sector ETF,
increased by 43%
“After weeding out tough second-quarter product cycles and lingering impacts from COVID, strong secular positioning and an attractive multiple make MSFT a leading stock in the recovery,” Weiss said. The Morgan Stanley analyst expects growth of 41% in Azure in the second quarter and 41.6% in fiscal 2021.
Citi Research analyst Walter Pritchard, who has a buy rating and price target of $ 272, sees unfavorable margins in Microsoft’s games sector and expects continued strength in PCs to compensate low server and desktop licensing.
“We are seeing a positive setup around high level KPIs for Microsoft, with a likely rise in Azure growth metric and future Azure numbers rising here after contracts are signed and consumption indications still strong. “Said Pritchard.
Mizuho analyst Gregg Moskowitz, who has a buy rating and a price target of $ 255, sees Azure growth of 48% year-over-year.
“We say Azure is getting more powerful and MSFT has assembled an impressive collection of cloud assets that will continue to drive strong overall growth for a company of its size,” said Moskowitz.
Of the 33 analysts who cover Microsoft, 31 have buy ratings and two have restraining ratings, with an average target price of $ 248.19, according to FactSet data.
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