Analyst: Video Games To Be Big Driver For Microsoft Corporation (MSFT)

Things are going pretty well for Microsoft Corporation (NASDAQ:MSFT) these days, but there’s ways to make things even better. UBS analyst Jennifer Lowe points that out in a recent note to clients, and she says that video game sales just may be the way to make it happen.

Marketwatch passes along Lowe’s take on what Microsoft needs to do.

As investors approach Microsoft Corp. and its fiscal third-quarter earnings, they should begin to expect to see predictable videogame revenue instead of the cycles of sales they have become accustomed to.
Microsoft has three major ways it can drive millions of dollars more in videogame sales: Look beyond Xbox to other devices — especially mobile; capitalize on micro transactions and subscription revenue; and lure developers to the company’s nascent Azure unit, according to UBS analyst Jennifer Lowe.

Lowe, who currently has a buy rating and a $110 price target in place for Microsoft, notes the evolution of the video game market as a whole, but she points out that’s partially where the opportunity lays. Consoles remain a huge part of the market, but there are other segments that are also moving the needle.

“We think the evolution of the gaming market represents a much richer set of opportunities for Microsoft today, with a larger revenue base and better unit economics, as well as an opportunity to pull through demand for Microsoft Azure services,” she wrote.

Microsoft Corporation shares rose $0.57 (+0.59%) in premarket trading Monday. Year-to-date, MSFT has gained 12.54%, versus a 0.29% rise in the benchmark S&P 500 index during the same period.

MSFT currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #1 of 68 stocks in the Software – Application category.