By Emily Dattilo
Buy Microsoft stock for the company's sizable opportunity in gaming, one Wall Street research firm says.
Macquarie analysts led by Frederick Havemeyer boosted their price target to $475 from $460, raised estimates, and maintained an Outperform rating in a Thursday research report titled "World of Microsoft Gaming: Unveiling Microsoft's treasure chest of gaming gold."
Microsoft stock was down 0.3% to $419.62 in late morning trading.
In October 2023, Microsoft completed its acquisition of videogame company Activision Blizzard for $95 per share.
"When Microsoft acquired Activision Blizzard, it cemented itself as the third-largest gaming company in the world with a leading platform spanning game portfolio," the analysts wrote. "We view the time, efforts, and the $69 billion price tag invested by Microsoft into this deal as a reflection of Activision Blizzard's immense importance to its consumer growth algorithm."
The research team says it expects the company to use its global distribution scale to expand Game Pass -- a subscription service that is part of its Xbox franchise -- from its existing user base of 34 million toward the level of Activision Blizzard, which boasts at least 350 million monthly active users.
Microsoft would be "thereby increasing the mix of sticky, recurring revenue within its Gaming segment," the Macquarie team said. The analysts also see opportunities for Microsoft in the cloud gaming and mobile gaming markets, respectively.
Write to Emily Dattilo at emily.dattilo@dowjones.com
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(END) Dow Jones Newswires
May 17, 2024 12:54 ET (16:54 GMT)
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