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Microsoft Corporation (NASDAQ:MSFT) – Can Nadella Lift Stock to All-time High?

Microsoft Corporation
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Microsoft Corporation (NASDAQ:MSFT) is gearing to report fiscal third quarter results after the close of trade on Thursday. And ahead of the key event, both fundamentals and technicals suggest the stock could be one of the surprise performers of 2016.

Shares of Microsoft ended Monday at $56.50, up 1.5 percent for the session.

Microsoft Corporation

Microsoft Corporation is Coming Out of the Shadows of Gates, Ballmer

Microsoft’s latest operating system has been a “roaring” success, and its cloud business is steadily capturing market share. No wonder, analysts expect both earnings and sales to have increased during the third quarter. The Wall Street consensus is for EPS of 64 cents, versus 61 cents in the year ago quarter. Revenue is also forecast to rise to $22.087 billion from $21.729 billion in the same period last year.

“Microsoft can beat FQ3 March consensus expectations,” Pacific Crest’s Brendan Barnicle wrote to clients.

Nomura analyst Frederick Grieb was even more effusive. “We are positive on the stock as we believe the transition to Office 365 is trending ahead of plan,” he said, before lifting the target price to $65 a share.

A lot of credit for the recent successes at Microsoft should go to CEO Satya Nadella, who seems to have correctly identified strategic areas of growth, and is going all out to capture newer markets.

“Under Gates and Ballmer, Microsoft seemed satisfied with, and addicted to, the revenues generated by its legacy, cash cow products – Windows and Office. When it came to innovation, Microsoft trailed the market,” according to Ira Kalb, Assistant Professor of Clinical Marketing at the University of Southern California’s Marshall School of Business.

“Nadella has been quietly transforming Microsoft into an innovative Cloud based company…and is set to become a major player in the Internet of Things market,” he added.

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Microsoft Corporation – Lifetime High Beckons

Microsoft Corporation (NASDAQ:MSFT) had a mixed 2015. Until October, the stock was stuck in a trend less price range, before breaking out above the $50 mark. However, the start of the year saw shares tumble along with the broader markets. The stock bottomed in February, and has since then, soared over 10 percent.

On the upside, $57 is the immediate line of resistance. In the event of shares piercing through that zone, investors can expect Microsoft to make a dash to the lifetime high of around $60, set during the tech bubble of 1999. If quarterly results disappoint, $54 will be the key level to watch out. As long as it holds, the uptrend in MSFT is intact.

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Abhijit Sen

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