Here’s why Microsoft could be a buy ahead of earnings – CNBC

<!– –>



Ahead of Microsoft‘s quarterly earnings report due out on Thursday after the market close, one macro strategist is marking the stock as a buy.

The legacy technology company has seen a strong long-term trend, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. Even if Microsoft sees a short-term decline here, it’s still going to present a good buying opportunity as a good “relative value bet,” he said Wednesday.

“One of the key things to watch for is how successful Microsoft is going to be in the future in converting consumers to a subscription model. Generally, most of the analysts expect Microsoft to come in strong in this quarter, but we’re going to be watching the numbers. And, the more important point here is that the longer-term trend for Microsoft is very positive,” Schlossberg said Wednesday on CNBC’s “Trading Nation,” adding that the stock is quite cash-heavy and is still very undervalued relative to its peers.

Bolstering Schlossberg’s bullish outlook is the company’s ability to evolve in recent years from a software enterprise business to one reliant on subscription revenue and cloud services.

“Instead of trying to capture revenue all the way up front, they made a very astute business decision to try to capture revenue every single year by locking customers in to their Office 365 product,” he said.

Persuading consumers to upgrade to a subscription model for Office 365 services has been a weak spot for the company, though, Schlossberg said, as Google’s suite of office tools could present competition.

“Microsoft appears to be a very strong trade still for the next several years as this business change continues to develop,” Schlossberg said.

The stock was trading modestly higher on Wednesday. Analysts are expecting earnings per share of $3.03, according to FactSet estimates.

Videos





  • Eddy Elfenbein, fund manager and editor of the Crossing Wall Street blog, says Alphabet is “making tomorrow today.” Elfenbein is bullish on the company.




  • Should investors play healthcare stocks for a breakout?

    Chris Verrone of Strategas Research Partners and Eddy Elfenbein of the Crossing Wall Street blog discuss healthcare stocks with Eric Chemi.





  • The dollar index just fell to its lowest level in over a year. Chris Verrone of Strategas Research Partners and Eddy Elfenbein of the Crossing Wall Street blog discuss with Eric Chemi.

Trades to Watch




  • This is what investors should watch in the homebuilder sector (Hint: it's not Amazon)

    The latest housing starts data was positive but news from Amazon sent shares of home improvement retailers tumbling. Matt Maley of Miller Tabak reminds investors of what’s really important.




  • Why this tech bellwether is a good buy for the long run

    Boris Schlossberg of BK Asset Management says Microsoft has a strong long-term forecast that investors can buy into.




  • Before a big earnings week, watch analysts' revisions for clues

    Erin Gibbs of S&P Global says investors should pay attention to analysts’ revisions prior to earnings week.

Trader Bios



  • Stacey Gilbert

    Stacey Gilbert is the head of derivative strategy at Susquehanna.




  • Managing Director, ACG Analytics



  • Rich Ross

    Managing Director, Head of Technical Analysis, Evercore ISI

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC’s “Power Lunch” (M-F,1PM-3PM ET), one of the network’s longest running programs, as well as the host of the daily investing program “Trading Nation.” He is also a frequent guest on MSNBC’s “Morning Joe” and other NBC properties.


Read more

Quantcast



Comments

Write a Reply or Comment:

Your email address will not be published.*