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MSFT Stock Hits All-Time High: Can it Keep the Momentum Going?

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New Highs

Microsoft (MSFT - Free Report) opened Thursday at a new 52-week high and also a new all-time high of $137.66 per share. Microsoft hit this all-time high after reaching its previous all-time high the day before. Microsoft’s momentum is extremely high right now and has fueled the stock’s gains over the past 6 months.

Since the start of the year, Microsoft stock has had steady gains. YTD the stock is up 34%, including a 12% jump since the beginning of June.

Microsoft’s new high was also partly a result of Deutsche Bank reiterating its “Buy” rating on the company. The firm also raised its price target from $145 to $155 per share. Plus, Microsoft is currently a Zacks Rank #2 (Buy).

Outlook

Analysts have been positive about the company’s fiscal 2019 and fiscal 2020 earnings (Microsoft ends its fiscal year in June). Estimate revisions have trended completely upward, with 13 upward and 12 upward revisions for fiscal 2019 and 2020 earnings, respectively. Zacks Consensus Estimates call for earnings to surge 18% on the back of 13% revenue growth for fiscal 2019. Fiscal 2020 is expected to have further growth with expectations of 10.57% revenue growth and 11.24% earnings growth on top of their respective fiscal 2019 estimates.

Microsoft also seems to be relatively well valued. Microsoft currently trades with a Price/Cash Flow ratio of 25.78, below industry average of 28.12. This is important because it shows that even compared to this record high stock price it still has strong cash flow.

Microsoft’s growth also comes as the Department of Justice and Federal Trade Commission prepare for antitrust probes into some of Microsoft’s major competitors, namely Facebook (FB - Free Report) , Apple (AAPL - Free Report) , Google (GOOGL - Free Report) and Amazon (AMZN - Free Report) . The big tech investigations that have been fueled by 2020 presidential candidates and others in Washington have, so far, not involved Microsoft. This might provide some comfort to investors that Microsoft has avoided the antitrust probes for now.

Bottom Line

With the S&P 500 hitting an all-time high today, investor confidence is quite high. This confidence, Microsoft’s recent momentum, solid earnings expectations, and good value give Microsoft’s stock the potential to continue this hot streak. 

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