RBC Capital analyst Ross MacMillan is chiming in on Microsoft Corporation (NASDAQ:MSFT) on the heels of the Build Developer Conference, which put two key platforms on display: O365 and Azure. Cheering “new innovation” from the software king, MacMillan sings the praises of Microsoft’s “exceptionally” strong standing in the market.
In reaction, the analyst reiterates an Outperform rating on MSFT stock with a $115 price target, which implies a 17% upside from current levels. (To watch MacMillan’s track record, click here)
Considering the latest reveals circling Sphere, IoT Edge Runtime, as well as new alliances in the works, MacMillan believes Internet of Things (IoT) is in full “focus” at Build 2018. The company pivoted meaningful focus on its conference to the following innovations: “IoT Edge Runtime (a stripped-down version of Windows for intermediate devices), new partnerships (such as Qualcomm and DJI for SDK’s for devices) and Custom Vision (the first Cognitive Service to be offered for Azure IoT connected devices),” notes MacMillan. Though Microsoft Sphere had been unveiled in April, it was exhibited at the conference, a triple threat of reference architecture, partnerships, as well as cloud services to cultivate a network of devices that is both secure and connected- all on back of micro-controllers (MCUs).
The analyst highlights, “Given 9B MCU’s ship each year, yet an estimated <1% are connected to the internet today, MSFT is staking ground in the opportunity to empower the connected device opportunity through a new generation of MCU’s via reference design (higher RAM and storage), a new MCU operating system and a new security service (based on MSFT’s 7 property model that includes silicon based encryption). Given the impressive list of customers that already use MSFT for IoT services, we think the company is well positioned to further leverage this leading position for future use cases.”
Meanwhile, MacMillan hpoints out new apps from Remote Assist and its collaborative capabilities to Layout’s spatial design that put augmented reality (AR) as well as virtual reality (VR) in powerhouse focus; via a revamped Hololens and Kinect, Azure is looking that much stronger. Moving forward, “The examples are impressive, but it’s the real world applicability that will determine if MSFT has a strong position in AR/ VR in the absence of a smart phone OS position,” surmises MacMillan.
TipRanks reveals the software giant is a favorite bet on Wall Street, according to analytics. Out of 18 analysts polled in the last 3 months, 16 are bullish on MSFT stock, 1 remain sidelined, while 1 is bearish on the stock. With a solid return potential of 12%, the stock’s consensus target price stands at $109.80.