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Microsoft Affirmed Buy on Shift to Work From Home

Jefferies affirmed a buy rating on Microsoft, saying the shift to work from home amid the pandemic has bolstered its bottom line.

Microsoft  (MSFT) - Get Microsoft Corporation Report is the latest tech giant to benefit from the shift to working from home, winning a vote of confidence from a top industry analyst.

With the Dow industrials lower and the Nasdaq Composite flat, Microsoft shares rose Thursday after Jefferies analyst Brent Thill affirmed his buy rating on the Redmond, Wash., tech giant and stuck with his $200-a-share price target.

Microsoft has received a significant boost from the shift to work-from-home routines by workers across the globe amid the coronavirus crisis, the Jefferies analyst said.

Microsoft Teams, which provides web and videoconferencing services, has helped lead the way as companies and their employees, unable to meet in person, are forced to do so virtually.

"The biggest beneficiary of the new work from home environment is in the productivity suite and especially Microsoft Teams, which has seen a large spike in demand," Thill wrote.

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Microsoft's cloud-computing service Azure, its gaming systems, and Windows have also seen increases amid the work-from-home shift. Customer upgrades of their devices have increased and use of Windows Virtual Desktop has tripled, the Jefferies analyst noted.

The biggest increase in demand for Microsoft Teams has also had a "halo effect," driving increased renewals for Microsoft 365 while also helping the company upsell to more premium products, Thill wrote.

Security issues surrounding videoconferencing, such as hackers disrupting meetings on Zoom  (ZM) - Get Zoom Video Communications Inc. Report, have also provided a favorable contrast for Microsoft and Windows.

The tech giant has invested $1 billion a year into security with a staff of 3,500 employees focusing on security issues, the analyst noted. 

At last check Microsoft shares were trading up 0.7% at $195.50.