Microsoft Bulls Abound as Shares Rise to Record Before Earnings

(Bloomberg) -- Microsoft Corp. is trading at a record high as it prepares to release its latest quarterly results. And Wall Street keeps sounding a bullish call for the world’s largest software maker.

The company now has 31 buy ratings, up from 26 at the start of this year and the most since late 2010. While analysts’ earnings-per-share estimates are little changed since May, their average price target for the stock has climbed. They predict the shares will increase 7.5 percent over the next 12 months, compared with a 5.5 percent average gain seen among the 36 stocks in the S&P Supercomposite Software Industry Index.

Microsoft Bulls Abound as Shares Rise to Record Before Earnings

Microsoft, once known for its dominance in desktop computer operating systems, has climbed more than 20 percent this year as investors grow increasingly confident in its push toward cloud computing. While the company has made headway there, it faces tough competition from deep-pocketed rivals including Inc. and Alphabet Inc.’s Google.

Just this week, Raymond James Financial Inc. analyst Michael Turits, who has a strong buy recommendation on Microsoft’s shares, increased his target price by 13 percent to $124. He said in a research note that the company’s success in pushing its products through partners and positioning itself as a cloud leader present upsides for long-term growth forecasts and pointed out that PC shipments are up for the first time in six years.

Analysts at Bank of America and Piper Jaffray each also raised their price targets as the company is set to report its fiscal fourth-quarter results after the close of trading Thursday. The average earnings-per-share estimate is $1.08.

Options trading indicates a 3.9 percent move in the shares after the earnings, which is slightly below the average of 4.2 percent, according to data compiled by Bloomberg. And options investors seem to agree with sell-side analysts who see further strength in Microsoft. Blocks of 15,000 of the Aug. 3 $105 and $109 calls appear to have been bought on Tuesday, while $96 and $98 strike puts were simultaneously sold.

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