Microsoft Corporation (NASDAQ: MSFT) has been in the news for its $16 billion takeover bid of Nuance Communications (NASDAQ:NUAN). According to Reuters, the European Commission gave an unconditional antitrust approval for the deal, spotting the absence of any anti-competitive fears.
Microsoft is a technology behemoth producing both hardware and software solutions for the sector. Meanwhile, Nuance is an artificial intelligence (AI) and speech technology company and serves about 77% of U.S. hospitals.
Following the news, MSFT shares jumped 2.3% to close at $327.29, while NUAN ended the day flat at $55.20 on December 21.
EU Antitrust ApprovalWinning the EU Antitrust approval is a big step for Microsoft as it can go ahead with its proposed acquisition. In November, the European Commission initiated consumer and competitor reactions to address any anti-competitive concerns.
The Commission said that the investigation found no threat to competition in the markets for transcription software, cloud services, enterprise communication services, PC operating systems, and other products.
The Commission also stated that both companies offered very different products, and that there was no overlap between MSFT and Nuance’s transcription software services.
The company has already sought approval from regulators in U.S. and Australia. The acquisition is the second costliest deal for Microsoft, the highest one being the LinkedIn acquisition, worth $26.2 billion in 2016.
Commenting on the occasion, the Commission said, “The proposed transaction would raise no competition concerns on any of the markets examined in the European Economic Area.”
Wall Street ViewYesterday, SMBC Nikko analyst Steven Koenig initiated coverage of the MSFT stock with a Buy rating and a price target of $410, which implies 25.3% upside potential to current levels.
According to Koenig, Microsoft is well-positioned to capitalize on the digital transformation trends. He also stated that the company's best-in-class product offerings, leading market positioning, as well as solution selling capabilities give it a major advantage over its peers.
Wall Street’s Top Research Firms have given the stock a Strong Buy consensus rating based on 24 Buys and 1 Hold. The average Microsoft price target of $370.23 implies 13.1% upside potential to current levels.
Website TrafficTipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into MSFT’s performance.
In November, Microsoft website traffic recorded a 4.16% year-over-year decline in monthly visits. However, year-to-date website traffic growth increased by 15.20% compared to the same period last year.
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Accelerated digital transformation across the globe is proving to be beneficial for tech giant Microsoft (MSFT), boosting the demand for its Azure cloud platform. However, increased cloud transformations mean greater security risks, and that is what Microsoft is focusing on currently.
Expert Gives Positive OpinionRecently, Mizuho analyst Gregg Moskowitz interviewed top executives from Microsoft’s management and was impressed by the company’s growing strength in identity and access management (IAM). “In our view, MSFT's increasing prioritization of security over the last few years is materializing in the form of stronger protection for customers, tighter product integration, and better monetization, and certainly this includes the identity space,” noted Moskowitz.
The analyst reminded us that Microsoft had disclosed the revenues it realized from its portfolio of security products for the first time. Microsoft notably crossed $10 billion in revenues over the past year. The company also revealed that it has approximately 650,000 security customers presently.
Moskowitz reiterated a Buy rating on MSFT stock, with a price target of $360.
A Tense Threat Environment Calls for ActionMicrosoft is grappling with a very challenging threat environment, given the 150% rise in ransomware attack incidents over the last year, and about seven times more phishing campaigns now since the onset of the pandemic.
Also, the company is currently reeling from more than 550 cyberattacks per second targeting digital identities. As if that’s not enough, the new Log4J vulnerability is expected to impact millions of devices soon, making it all the more necessary to up the ante in security.
These are the forces that are prompting Microsoft to take its provision of security up a notch.
Growing Clout in Security Bodes WellManagement commentary in the MSFT earnings call for the last reported quarter seemed upbeat about the company’s growing strength in the area of security. “We analyze over 24 trillion signals across email, endpoints, and identities each day and translate this intelligence into innovative features to protect our customers. We have prevented more than 70 billion attacks over the past year alone,” emphasized management.
Furthermore, high demand for the company’s premium Microsoft 365 E5 offerings and advanced security solutions is expected to lead to low double-digit growth in Windows commercial products and cloud services in the second quarter of fiscal 2022.
Significantly, the Microsoft 365 E5 brought in meaningful revenues, fueled by strong demand for its advanced security, compliance, voice, and analytics capabilities.
The company also pledged to invest $20 billion towards its security solutions over the next five years, in order to combat the growing sophistication of cyber-vulnerabilities better.
Wall Street Weighs InThe consensus rating for Microsoft is a Strong Buy, based on 23 Buys and 1 Hold. The MSFT stock forecast says $368.33, indicating a 15.14% upside to the present share prices.
Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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