2024-01-19 16:01:38
Bank of America expects its second-quarter revenue forecast to rise 1% on continued strength from Azure and M365. (Photo: 123RF)
What to do with the titles of Microsoft, Gildan and Quebecor? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
Microsoft (MSFT, US$389.47): Azure and Office in the lead
Microsoft’s growth in the second quarter should be driven by the strength of Azure and Office, estimates Bank of America.
Analyst Brad Sills expects his second quarter revenue forecast of US$60.9 billion to rise 1% (+17% YoY) on continued strength from Azure and M365 , but which will be offset by a reduction in the delivery of personal computers (PC).
On the Azure side, the analyst believes there will be a 1% increase over his growth estimate, particularly due to feedback from Microsoft’s integration partners that suggests a solid migration of new work volumes and continued adoption of the company’s security packages, which include Sentinel, Purview and Entra, among others.
For Office, Bank of America predicts an increase of US$450 million to its revenue forecast in the productivity and business processes segment, for a total of US$18.6 billion. This growth will come in particular from the commercial side of Office.
Brad Sills reiterates his buy recommendation on Microsoft’s stock, which represents a strong reacceleration story for 2024. The acceleration in growth of Active Server Pages (ASP) relative to the “tether” that is M365 Copilot should propel Office almost 20%.
For Azure, the growing contribution of artificial intelligence and improved macroeconomic conditions are expected to accelerate new workloads and revenue growth previously estimated at 26.5%. The analyst therefore expects the company’s total revenues to climb closer to 20%.
Bank of America increases its target price for Microsoft shares from US$430 to US$450.
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