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Microsoft’s stock closed at a new high on Monday, as more analysts realized the financial implications of the software and hardware maker’s decision to raise the price of certain Office 365 business subscriptions. next year.
The shares closed at $ 304.65, giving the company a market cap of nearly $ 2.3 trillion. Microsoft shares have risen 37% this year, overtaking most of its major competitors except Google’s Alphabet, which has gained nearly 60% on the year so far.
Analysts were not quick to update their estimates, but many said the price change had the potential to boost revenue for a key part of the company’s business.
Commercial subscriptions to Office 365 software accounted for about 18% of Microsoft’s revenue in the fiscal year ended June 30, the Goldman Sachs analyst team, led by analyst Cash Rajan, wrote on Sunday.
“We believe the latest announcement highlights the company’s strong competitive position and long-term pricing strength, helping to drive continued growth for ARPU through 2022,” the bank’s team said. .
The price of one type of subscription, Office 365 E5 premium, will increase by 9% per user per month from March 1, 2022, while the cheapest Office 365 E1 will increase by 25%.
In turn, analysts Mizuho and UBS raised their price targets for Microsoft shares to $ 350 from $ 325 after the company announced.
More revenue from this subscription means more money for the highly profitable Windows business, as well as the per-user portion of the fast-growing Azure cloud business, UBS analysts wrote.
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