There is no shortage of reasons to like Microsoft (NASDAQ:MSFT). The company has been flying high since the appointment of CEO Satya Nadella in 2014, and now boasts a market capitalization of $1.23 trillion. Like most stocks, Microsoft has felt the impact of the coronavirus from China. However, even taking that setback into account, Microsoft stock has still put together an impressive 43% run over the past 12 months.
The company has a diverse range of businesses, a rapidly growing cloud presence and it shows no sign of slowing down.
Microsoft may actually see some wins out of the coronavirus (more on that shortly). Even without that possibility, with the stock currently down 17% from its mid-February high of $188.70, it’s presenting a buying opportunity.
Investment Analysts Love MSFT
Good luck finding an investment analyst who doesn’t see Microsoft as a must-have for your portfolio.
Among the 34 analysts surveyed by The Wall Street Journal, 28 have the stock rated as a “buy.” Their average 12-month price target of $196.97 offers 22% upside. Evercore ISI is particularly bullish on Microsoft, recently raising its price target to $212, noting:
“The bottom line is we believe that Microsoft is well-positioned to grow its top line and bottom line in the double digits for the foreseeable future, and the stock should continue to outpace the broader markets over the next few years.”
Diversity
One of the keys to Microsoft’s growth (and resilience) is its diversity. While Office and Windows are still important to the company’s bottom line, the company has significantly broadened its offerings.
The Surface lineup is a popular collection of premium PC hardware, including the class-leading Surface Pro tablet. Microsoft is a leading game console maker, with a very popular online gaming service (Xbox Live), and an all-new console (Xbox Series X) due to launch later in 2020. Microsoft is also set to launch its xCloud game streaming service this year. The company is also a pioneer in augmented reality. Its HoloLens headset is now in its second generation, and seeing both commercial and military adoption.
A Cloud-Based Future
What really excites analysts is Microsoft’s cloud computing bet. The company’s investment in its Azure cloud division has been paying off big time.
Azure powers Microsoft’s own products, including subscription-based Office 365, Microsoft Live, Bing, Cortana and the forthcoming xCloud. Azure also competes against other cloud service providers, and is gaining on Amazon’s (NASDAQ:AMZN) first-place AWS. Microsoft’s cloud customers include eBay (NASDAQ:EBAY) and Samsung, and in November, Azure beat out AWS for the $10 billion U.S. Department of Defense JEDI contract. Though that contract is currently being contested.
With cloud computing and related applications only growing in importance, Microsoft is well positioned to take full advantage of the trend.
Potential Coronavirus Wins?
Many sectors are taking a beating from the coronavirus and are likely to see long-lasting harm from the outbreak. For example, travel companies like Booking Holdings (NASDAQ:BKNG) face a pretty dismal year. As unlikely as it might seem, there are aspects of Microsoft’s business that could actually get a boost from the coronavirus.
As people hunker down and stay home, they will be looking for entertainment. That means the company may sell more Xbox game consoles and more Xbox Live passes. As companies begin to encourage employees to work from home, that could result in an uptick in subscriptions to Office 365. Organizing and keeping remote workers on track can be a challenge, and that could boost the adoption of Teams — Microsoft’s Slack (NYSE:WORK) competitor.
Bottom Line on Microsoft Stock
Yes, the coronavirus has done a number on Microsoft over the past two weeks. But the company is better positioned than most companies to ride it out. Some of its businesses may even benefit from the outbreak. Once we are back to normal? The company is set to resume its trajectory — even the most pessimistic analysts still see growth for Microsoft over the next 12-months.
Microsoft stock may have dropped 17% since closing at a record high on Feb. 10, but that only makes it a buying opportunity.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, he did not hold a position in any of the aforementioned securities.