Microsoft gets new Street-high price target from Citi. Why one trader says 'it’s a staple within your portfolio'
Microsoft stock jumped to an all-time high after Citi bestowed it a Street-high price target of $378 per share. The firm called the tech titan the "best" in megacap software ahead of its earnings report next week.
"It's a staple within your portfolio, and you need to have it," Blue Line Capital founder and President Bill Baruch said Thursday on CNBC's "Trading Nation."
"At the end of the day, it's a stock that continues to have a different story that powers it to a new level," he added, pointing to the company's recent information technology spending and other fundamental characteristics.
Baruch also called attention to Microsoft's history of reporting strong earnings, highlighting its "earnings growth at a 40% clip for the last several years, year over year."
"I think the very strong balance sheet is something to lean on as well," he added.
Furthermore, "the technical landscape within this stock has been tremendous," Baruch said, zooming into the chart.
"The pullbacks have hit support perfectly. The breakouts have been textbook breakouts," he said, pointing to the stock's recent breakout from a wedge pattern, which has been strongly trending since the beginning of July.
Not only did the stock break out, but so did its average directional index, signaling that the stock is trending higher, Baruch said.
"If this thing stays above 275, there's no question about it, you got to be long," Baruch said.
Microsoft shares closed up nearly 2% to a record $286.14 on Thursday. It was climbing higher in Friday's premarket.
In the same interview, Chantico Global founder and CEO Gina Sanchez also gave a bullish take on the company.
"Microsoft has a lot of tailwinds," she said, highlighting the company's strong cloud computing business.
Sanchez pointed out that although its cloud business had been doing well pre-Covid, the pandemic actually supercharged its growth.
This is good for Microsoft as "about a third of their revenues are coming out of the cloud business," she said. "Another third is coming from gaming as well, which has also done really well."
On top of this, she expected the tech titan to benefit from the post-pandemic workplace due to increased demand for the company's products.
"The outlook for the hybrid work environment, continued focus on business continuity — all of those feed into Microsoft's core business," she said.
"We think the name had a lot more to go before the pandemic," she said. "Coming out, it's going to be even stronger, so we think that this is a long-term hold."
Microsoft is scheduled to report earnings on July 27.
Disclosure: Gina Sanchez owns Microsoft shares personally, and Lido Advisors owns Microsoft in its client equity strategies. Bill Baruch also owns Microsoft.