"Microsoft Corporation (NASDAQ: MSFT), already a holding on our buy list, was added to Goldman Sachs' Conviction Buy List," says Bill Martin. In BullMarket.com, he offers the reasoning for his continued buy rating.
"Analyst Sarah Friar at Goldman recently raised her price target on the name to $29 from $25 saying, 'We are adding Microsoft to our Conviction List as we think the combination of better revenue drivers, improved expense management, and sizable cash balances provides more opportunities for bottom-line beats.'
"'Windows 7, Windows Server 2008 R2, Bing, Xbox 360 and new Halo content, Office 2010, and the Azure Cloud provide renewed innovation beyond anything we have seen in multiple years,' Friar wrote.
"She added, 'Looking out to 2010 and beyond, the new product pipeline, combined with a modest rebound in IT spending, should buoy top-line growth. The stock remains under-owned by growth managers, providing further buying power.'
"While Friar is bullish on Microsoft, she isn't expecting a great June quarter due to the current IT spending environment. However, she believes investors will soon start to look beyond 2009 and towards higher growth rates from the 2010 Windows 7 product cycle.
"She said the biggest risks the stock faces are a prolonged weak economic environment and a more rapid than expected shift to software as a service (SaaS) offerings.
"In our view., Microsoft has been a hated company and reviled stock for years. However, it is currently an inexpensive stock (P/E around 13x) with a strong balance sheet and a clear catalyst (the Windows 7 launch).
"Yes, the ten-year chart may look like the stock flatlined on the operating table, but we think it may finally be ready to show some signs of life.
"Windows 7 is getting good early reviews (when was the last time that happened?), and if the company can make bundles of money selling products that many people don't particularly care for, a product end users actually like could do wonders for the bottom line and the stock.
"Throw in Microsoft cutting some fat after years of getting a bit bloated, and you have a stock that is a 'Buy.' Our Target is $30."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
6-29-2009 @ 7:51PM
sitruc said...
No ish.
6-30-2009 @ 10:09AM
Mike O said...
I think Microsoft is a super smart buy right now. Windows 7 is the future and while far from perfect, you will see a LOT of people upgrading over the next couple years.
Xbox 360 has solidified it's place as the #2 gaming console throughout the Western world and is the choice of hard core gamers. That's why attach rates (average number of games sold per console) are higher than all others.
The marketing campaign for Bing has been well executed.
I believe you will see modest, steady gains from MSFT for awhile and then a small boom 24-36 months out when the economic recovery is under way and IT spending increases.
7-01-2009 @ 10:41PM
Beltway Greg said...
Asked questions of both "Bing" and Google. Overall, Google still worked much better. Don't understand all of the excitement here. Oh, I'm sorry, I get it. When Microsoft releases something that doesn't completely suck like the Zune or Vista it's a victory. File this under I was sad that I didn't have a bottle of 1982 Petrus until I met a man who didn't have any wine at all and then I understood
the true nature of depravity.
9-14-2009 @ 5:13AM
Jacky said...
I think Microsoft has over come all the issues regarding Windows Vista and finally launched Windows 7 which proves to be the best achievement of Microsoft soon after the arrival of Vista