Coronavirus makes Microsoft stock an amazing money-making opportunity: top analyst
In the eyes of long-time tech analyst Dan Ives, the coronavirus represents more of a speed-bump for tech giant Microsoft (MSFT) rather than a mountain that cannot be navigated.
Hence, Ives thinks it’s time to back up the truck on the King of Redmond now that the stock could be had at a much cheaper valuation amid the broader market rout.
Ives said on Yahoo Finance’s The First Trade Microsoft is well positioned to continue to benefit from the shift to cloud services and ongoing momentum in hardware such as the Surface. Investors just need to ride out the short-term volatility.
“Despite near-term worries, we believe Azure's cloud momentum is still in its early days of playing out within the company’s massive installed base, the Office 365 transition for both consumer/enterprise is providing growth tailwinds over the next 12 to 18 months (at least), and newer integrated product initiatives around consumers and cloud services (LinkedIn) are front and center,” Ives wrote in his most recent note on Microsoft to clients.
Microsoft’s stock has plunged 19% over the past month on fears of delayed hardware production out of coronavirus stricken China. Moreover, some in the market have feared business slowdowns will trigger a delay in capex spending that could delay the shift to Azure.
That concern in the market has brought Microsoft’s trailing price-to-earnings and enterprise-value-EBITDA ratios to the lowest levels in more than a year, per Yahoo Finance Premium data.
The stock’s dividend yield is 1.23%, paltry in the grand scheme of the overall equities market, but rather savory compared to a 10-year Treasury yielding next to nothing. Moreover, unlike other large companies being financially drilled by the coronavirus the chance of Microsoft cutting its dividend is completely unlikely given the company’s sizable cash position.
In fact, Microsoft may just raise its dividend again very soon to lure nervous shorter term investors back into the stock.
Ives has a $210 price target on Microsoft, representing at least 36% from current levels.
Added Ives, “Some of our best calls have been in times like this.”
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Read the latest financial and business news from Yahoo Finance
Beyond Meat founder: things are going very well with McDonald’s
Starbucks CEO on what China has in store for the coffee giant
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.
