Microsoft is the stock you "must own", says a trader



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Microsoft, America's most valuable public company, has already grown by 36% this year and is around its all-time high. But Cowen sees even more potential.

The company started Microsoft's coverage on Thursday with an outperformance rating and a price target of $ 150. Anticipating that the company will be able to generate an additional $ 100 billion in business by the year 2025, Cowen believes that Commercial Cloud, which includes Azure and Office 365 Commercial, will become the primary driver of the growth.

Traders agree with Cowen's positive sentiment on Microsoft, which hit Thursday a new record of $ 139.22 in intraday.

While Cowen's note focuses on Microsoft's growing cloud capabilities, Pete Najarian, co-founder of Investitute.com, has other reasons to be optimistic. "The growth of the cloud is part of it, as well as the subscription model," he said Thursday in the "Half Time Report". "By the way, we all want to say that Windows is dead.Windows is not dead.This continues to grow."

"It all depends on LinkedIn for my spirit and money here, rather than just focusing on the cloud," said Jon Najarian, co-founder of Najarian Family Office. LinkedIn, which Microsoft bought for $ 27 billion in 2016, has more than 610 million users and is responsible for more than 5% of the company's revenue.

Managing Director Satya Nadella, who took office in 2014, deserves much credit for Microsoft's success in recent years. Pete Najarian echoed the general opinion when he said that from the beginning, Nadella "had an absolute plan.This plan was to transfer the company at its current state, "a cloud competitor and software whose market capitalization exceeds $ 1 trillion.

Traders, however, have some concerns.

Pete Najarian thinks that the title "gets a little higher in terms of P / E". Microsoft's price-earnings ratio is 30 times higher than current earnings, and a high price-earnings ratio may indicate that the security is ahead of itself. Najarian still holds its buying and buying options, but keeps an eye on the increasing valuation.

In particular, despite Cowen's optimistic outlook on Microsoft's potential in cloud infrastructure, Najarian says you can not forget Amazon, which remains the undisputed leader. Last quarter, Microsoft's share of the market jumped from 10% to 13%, but Amazon remained at 33%. Najarian cautioned, "Microsoft is a distant second away, but if they can recover some of that market share, then absolutely, I think this stock can go higher."

Stephen Weiss of Short Hills Capital Partners has a short-term concern: Microsoft announces its financial results for the fourth quarter of next Thursday. "The company will continue to do well, but it must succeed.If they do not succeed, there is no safety net here," he warned. According to estimates by FactSet, analysts predict that the group will report a $ 1.21 EPS and a $ 32.75 billion business figure.

Bottom line? As Joe Terranova of Virtus Investment Partners said, "This stock is something you need to own."

Disclosure: Jon Najarian, Pete Najarian, Joe Terranova and Stephen Weiss own shares of Microsoft. Jon and Pete Najarian also have calls at Microsoft.

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