According to Wedbush analyst Dan Ives, Microsoft, the newest Yahoo Finance Company of the Year award winner, may not be done benefiting shareholders.
When asked if Microsoft can reach a market cap of $3 trillion in early 2022, the widely renowned tech analyst stated, “I think they certainly can hit.” Ives rates Microsoft as Outperform, with a $345 12-month price objective.
Microsoft’s stock is currently selling at $322 a share.
With a market capitalization of $2.42 trillion, Microsoft is only 23 percent away from achieving the $3 trillion threshold. With a market capitalization of $2.7 trillion, Apple is just $2.7 trillion away from becoming the world’s most valuable firm.
“As we can see, Microsoft is at the forefront of the cloud.” This, I believe, is what we’ve seen with the stock: a re-rating as investors have a better knowledge of how this growth storey is playing out. “We believe this company is worth $3 trillion,” Ives continued.
Microsoft earned the prized honour for various reasons, according to Yahoo Finance’s tech editor Dan Howley.
First, despite rising volatility in large-cap tech equities, Microsoft’s stock has delivered a strong 2021 performance. Microsoft’s stock has increased 45 percent year to date, easily outperforming the S&P 500’s 21 percent increase. Meanwhile, Microsoft’s main competitors, Apple and Amazon, have only gained 21% and 5.5 percent year to date, respectively.
The company’s financials, according to Howley, have been just as outstanding as its stock price performance. In the previous year, Microsoft’s revenue climbed by over 20% year over year to $176 billion.
Aside from Ives, Microsoft’s strong momentum has drawn additional bulls to the stock.
“Even after becoming one of the world’s most valuable companies (with a market capitalization of $2.5 trillion), we believe Microsoft has a bright future ahead of it, driven by continued growth prospects in large categories of IT spend (IaaS, cybersecurity, productivity, and so on), the ability to further monetize strong positioning in multiple end markets (via E3, E5, M365, and so on), and a financial profile that continues to exhibit durable growth and margin expansion, we believe Microsoft has a bright future ahead
The analyst launched coverage of Microsoft with an Outperform rating and a $400 price target.