Microsoft Corporation (NASDAQ:MSFT) stock could be a safe long-term bet, with any pullbacks a good buying opportunity.
After being dormant for years, Microsoft Corporation (NASDAQ:MSFT) stock has investors excited again, gaining over 130% in the last four years. 2016 was no exception with more than 13% return YTD. MSFT stock is trading near its all-time highs. 2016 has been mostly a transition year for Microsoft, it has a lot of momentum going into 2017 under the strong leadership of Satya Nadella.
Some in the analyst community tip Microsoft to beat other tech giants like Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL) to the $1 trillion market cap mark. Investment houses like Piper Jaffray, JP Morgan have recently upgraded Microsoft’s rating to overweight. Microsoft as a company is cool again and here’s why you should not miss on MSFT stock in 2017.
The Race To $1 Trillion Mark
According to Equities.com analyst Michael Markowski, Microsoft could be the first digital company hit a $1 trillion market capitalization. As of Thursday, Microsoft had the third largest market cap of $486.83B, behind Apple Inc ($619.79B) and Alphabet Inc ($543.04B). Microsoft’s $26 billion acquisition of LinkedIn Corp (NYSE:LNKD) is the big ticket according to analyst Michael Markowski. The LinkedIn acquisition expands its PE and positions Microsoft to capitalize from emerging online crowdsourced funding. Michael Markowski states”It has a monopoly on the business social media niche or community.” It is well positioned to take advantage of tons of data of 467M LinkedIn users. Microsoft also plans to use LinkedIn’s social graph to bolster its customer relationship management tool to compete with industry-leader salesforce.com, inc. (NYSE:CRM).
Based on its market cap and share price, Microsoft has the highest free cash yield among the contenders to reach $1 trillion mark. This metric gives Microsoft the edge over others in accessing capital markets to expand its business and for new acquisitions. Microsoft is heading in the right direction under Satya Nadella, and though still under transition, one can be very optimistic about Microsoft’s prospects.
Also Read: Not Cloud, This Could Be A Big Catalyst For Microsoft Corporation (MSFT).
Momentum Is With Microsoft
Firms including Piper Jaffray, J.P Morgan, and Merrill Lynch recently raised price targets for the company’s stock, signaling renewed confidence in Microsoft’s ability to grow. Piper Jaffray analyst Alex has set a price target of $80 which has an upside of more than 27% from Microsoft’s yesterday close price of $62.90. He considers Microsoft’s accelerating cloud business along with Office 365 and LinkedIn synergies as chief drivers of growth. Given Microsoft’s latest initiatives, this target looks very achievable in 2017.