Investors should buy Microsoft shares because the recent cyberattacks will spur companies to upgrade to the technology giant's latest operating system, according to Credit Suisse, which reiterated its outperform rating on the software firm.
The WannaCry ransomware malware hit 200,000 victims in 150 countries due to security holes in older Microsoft Windows operating systems.
"The recent global ransomware attack exploiting a flaw in Windows, while serious, not only demonstrates the continued ubiquity of Microsoft, but also highlights that many of the affected enterprises or entities that are still using older, and now unsupported, versions of Windows need to accelerate their plans to upgrade to Windows 10," analyst Michael Nemeroff wrote in a note to clients Monday entitled "If you're not current, you're toast."
"We believe the recent ransomware attack could accelerate the Windows upgrade cycle for enterprises, which would drive further upside to Office 365 Commercial MAUs [monthly active users] beyond what is currently factored into our estimates," he added.
The analyst reiterated his $80 price target for Microsoft, representing 18 percent upside from Monday's close.
Nemeroff cited how 85 percent of companies haven't yet upgraded to the latest Windows 10 operating system, according to Credit Suisse's corporate survey. He estimates Microsoft will generate earnings-per-share of $3.35 in fiscal 2018 compared to the Wall Street consensus of $3.31.
"We view MSFT shares as attractive due to the significant earnings power potential over the next several years," he wrote.