Microsoft's growth could get a boost from its latest Xbox launch as well as its exploration of the growing esports industry, according to one Wall Street analyst.

Canaccord Genuity upgraded Microsoft shares to buy from hold Wednesday, noting that the Xbox maker could give more credibility to the budding world of esports, which is centered on video game tournaments and already attracts thousands of participants and viewers.

"In our view, this is both an area of future internal development and prospective M&A," wrote analyst Richard Davis. "With regard to M&A, perhaps Microsoft could become the Ticketmaster of eSports, maybe they could run leagues."

Microsoft is set to release its latest generation of Xbox, called the Xbox One X, in November. Davis added that Microsoft's office productivity programs and its cloud computing platform, Azure, could also accelerate growth.

Shares of Microsoft rose 0.5 percent shortly after Thursday's market open. The company's stock is up 20 percent year to date through Wednesday.

The analyst raised his price target for Microsoft shares to $86, which is 15 percent higher than Wednesday's closing price. His old target was $76.

Esports are turning a lot of heads lately. Industry revenue is expected to hit $1.1 billion in 2019, and roughly 76 percent of esports fans claim the virtual tournaments are overtaking their time spent watching traditional sporting events, according to research firm Newzoo.

New England Patriots owner Robert Kraft recently made headlines by purchasing one of seven teams for the Overwatch League, a popular online game produced by Activision Blizzard.

"For brands, media, and entertainment companies, esports provides a chance to capitalize on the favorite pastime of digital natives and Millennials: playing games and watching game content," Newzoo's analysts wrote in the firm's annual esports market report.