Analyst Says Microsoft Is Relatively Well-Positioned For A Crisis

For investors scouting around for resilient stocks in the face of the COVID-19 crisis, Microsoft Corporation MSFT could be a good bet, according to a Morgan Stanley analyst.

The Microsoft Analyst

Keith Weiss has an Overweight rating on Microsoft with a $180 price target.

The Microsoft Thesis

Microsoft has strong positioning for both near- and longer-term environments, Weiss said in a Thursday note, citing Morgan Stanley's first-quarter AlphaWise CIO survey. (See his track record here.)

The CIOs surveyed expect to increase 2020 spending the most for cloud computing, security and collaboration projects, the analyst said. 

Microsoft is well-exposed to projects supporting remote work like collaboration software, VPN/remote access and desktop virtualization, he said. 

Survey respondents indicated Azure is the top preferred vendor for IaaS and PaaS in both the current scenario as well as over the next three years as a longer-term shift to cloud accelerates after the pandemic, Weiss said. 

The analyst also noted that the CIOs surveyed singled out Microsoft as best-positioned for hybrid cloud. They expect Microsoft to be the top share gainer from IT budgets in 2020 as a result of cloud migration, replacing Amazon.com, Inc.'s AMZN AWS, the analyst said. 

"A return to a more normalized operating environment, double-digit top line growth, as well as margin improvement through both additional efficiencies in cloud and opex growth profile should lead to double-digit FY19-FY22 EPS growth and a durable capital return profile." 

MSFT Price Action

Microsoft shares were trading 0.94% higher at $153.54 at the time of publication Thursday. 

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