Microsoft Corp. (MSFT) got a buy rating and $102 price target by Instinet, the Wall Street firm that was prompted to start bullish coverage thanks in part to Chief Executive  Satya Nadella and Chief Financial Officer Amy Hood.

In a research report this week, Instinet analyst Christopher Eberle called them "two of tech’s best executives" and said there’s a laundry list of things at the Redmond, Wash., software company that investors aren’t appreciating yet.

"MSFT has built its cloud platform into an industry powerhouse,” wrote Eberle in the report, which was covered by Barron’s. “With the number of connected devices expected to increase from 15.4bn in 2015 and to 30.7bn devices in 2020 (IHS Markit), a significant opportunity lies ahead, and we believe Microsoft is well positioned to benefit given its structural and architectural advantages embedded in its hybrid-cloud and Intelligent Edge ecosystem.” (See also: Microsoft Cloud May Best AWS in Profits: Bernstein.)

Profit From Work and Play

But it's not just it's strong growing cloud business that prompted Eberle to start coverage of the company with a buy rating and a price target that implies 12% upside. He pointed to its Dynamics 365 software, increased revenue from Office 365 and its gaming network. In the case of Dynamics, which is the internet-based version of Microsoft’s line of software, the analyst said the business has more room to run and will be a $5 billion a year unit by 2020 with $4.5 billion of it coming from Dynamics 365 up from $1.6 billion as of 2017.

As for Office 365, Eberle thinks revenue per user will increase as customers move to higher subscription levels which will make Microsoft more money. “ARPU increased by 20% over the last three years as roughly 60% of O365 customers have upgraded from the E1 to E3 service bundle. Over the next several years, we believe customers are more likely to consolidate more software services, like advanced threat protection and voice, with Microsoft by upgrading to the E5 service,” he wrote. (See also: Microsoft Could Be Worth $1T By 2020: Evercore ISI.)

When it comes to its gaming business, the analyst thinks there are strong prospects there too, saying that Xbox software and service revenue is in the early stages with an opportunity for it to grow in PCs, consoles, mobile, eSports and streaming gaming-as-a-service. He said the launch of new services such as Microsoft’s digital gaming download service Gamepass and more adoption of Xbox Live across different devices could drive subscription and service growth in the next few years. Eberle called the gaming business at Microsoft underappreciated by investors, writing that it could have a standalone market capitalization of $60 billion.

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