Microsoft Corp managed to close its stock at a new record high on Monday, as analysts realized the financial implications of the software and hardware maker's decision to raise the price of some Office 365 subscriptions for businesses next year.
According to Arab Net, shares closed at $304.65, giving the company a market capitalization of nearly $2.3 trillion. Microsoft shares are up about 37% this year, outpacing most of its major competitors, with the exception of Google's Alphabet, which has gained nearly 60% over the year so far.
Analysts were not quick to update their estimates, but many said the price change has the potential to increase revenue for a core part of the company's business.
Office 365 commercial subscriptions accounted for about 18% of Microsoft's revenue in the fiscal year that ended June 30, wrote the Goldman Sachs analyst team, led by analyst Cash. Rajan, in a Sunday note.
The bank team said: We believe the latest announcement highlights the company's strong competitive position and long-term pricing strength, helping to drive continued ARPU growth over the course of a year. 2022.
One type of subscription, the premium Office 365 E5, is set to increase by 9% per user per month starting March 1, 2022, while the cost of Office will increase. 365 E1 is 25% less expensive.
In turn, analysts Mizuho and UBS raised their price targets for Microsoft shares to $350 from $325 after the company's announcement.
More revenue from this subscription means more money for the highly profitable Windows business, along with the per-user portion of the fast-growing Azure cloud business, UBS analysts wrote. .
