Here's why Microsoft could be a buy ahead of earnings

Ahead of Microsoft's quarterly earnings report due out on Thursday after the market close, one macro strategist is marking the stock as a buy.

The legacy technology company has seen a strong long-term trend, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. Even if Microsoft sees a short-term decline here, it's still going to present a good buying opportunity as a good "relative value bet," he said Wednesday.

"One of the key things to watch for is how successful Microsoft is going to be in the future in converting consumers to a subscription model. Generally, most of the analysts expect Microsoft to come in strong in this quarter, but we're going to be watching the numbers. And, the more important point here is that the longer-term trend for Microsoft is very positive," Schlossberg said Wednesday on CNBC's "Trading Nation," adding that the stock is quite cash-heavy and is still very undervalued relative to its peers.

Bolstering Schlossberg's bullish outlook is the company's ability to evolve in recent years from a software enterprise business to one reliant on subscription revenue and cloud services.

"Instead of trying to capture revenue all the way up front, they made a very astute business decision to try to capture revenue every single year by locking customers in to their Office 365 product," he said.

Persuading consumers to upgrade to a subscription model for Office 365 services has been a weak spot for the company, though, Schlossberg said, as Google's suite of office tools could present competition.

"Microsoft appears to be a very strong trade still for the next several years as this business change continues to develop," Schlossberg said.

The stock was trading modestly higher on Wednesday. Analysts are expecting earnings per share of $3.03, according to FactSet estimates.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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