stock (ticker: MSFT) is hovering at all-time highs, with a market cap just above $1 trillion, giving it about a $70 billion lead on Amazon (AMZN) for the title of World’s Most Valuable Company. And there’s reason to believe it might not have reached a top.
Deutsche Bank analyst Karl Keirstead this morning repeated his Buy rating on the stock, boosting his price target to $155 from $145. (At that level, the company would have a market cap of about $1.2 trillion.) The analyst notes that Microsoft is benefitting from both a “strong business tone” and “a rotation into defense software stocks from other enterprise tech sectors seeing a cyclical decline in infrastructure spending.”
Keirstead writes in a research note that in a 90-minute meeting with the CFOs of two of Microsoft’s businesses, neither mentioned seeing any softening or change in enterprise demand. “Microsoft is not immune to any broader spending slowdown, but we left the meeting feeling that Microsoft is not seeing anything material yet and that any impact would be limited and largely offset by various product cycles occurring in 2019,” he writes.
Keirstead writes that he asked the executives about the various add-on components to Office 365 bundles, and “which one Microsoft was leaning into most.” The executives said the company is focused on Teams, a collaboration tool that is the primary competitor to Slack, which is expected to list its shares on the New York Stock Exchange Thursday.
“Microsoft appears to be taking on collaboration software pure plays via lower pricing, better integration with the broader Microsoft suite, leveraging existing relationships with purchasing managers and strong policy and security features, with the pure plays admittedly ahead on user adoption and ease of deployment,” Keirstead writes.
He concludes the note by saying that he left his meeting with the Microsoft executives “remaining bullish on Microsoft’s fundamentals and the stock.”
Despite the bullish note, MSFT stock was recently down 0.4% to $134.58; earlier in the day the stock hit an all-time high of $135.32.
Write to Eric Savitz at firstname.lastname@example.org