Microsoft's Smartphone Business Still an 'Uphill Battle': Analyst

Microsoft has seen big gains over the last few weeks, but can the world’s biggest software firm’s earnings after the bell on Thursday, keep the rally going despite a sluggish consumer market? Gregg Moskowitz, director and senior research analyst at Cowen & Company shared his insights.

“Microsoft grew 23 percent last fiscal year and we’re estimating 13 percent this year,” Moskowitz told CNBC.

Analysts who follow the company project the tech giant to earn 55 cents on revenue of $15.8 billion, according to an estimate from Thomson Reuters. Moskowitz's firm has an "outperform" rating on Microsoft.

“We’re looking at a very low multiple—we’ve seen very substantial multiple contraction in the face of fairly significant beats and raises over the past few quarters,” he explained.

“So ultimately, we see a little bit of a middle ground between the multiple that Microsoft has commanded versus what they’re getting right now. Our view is that over the 6 to 12 months, you will see that bear itself out in terms of some kind of recovery in the multiple but we don’t think it’s going to happen overnight.”

Meanwhile, Moskowitz described the firm’s smartphone business as an “uphill battle” going forward.

“Microsoft has seen its market share dwindle over the past few years due to a substandard product,” he said. “At this stage, they’re just significantly far behind competitors such as [Apple's ] iPhone and [Google's ] Android and it’s going to be difficult for them to catch up.”

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Moskowitz does not own shares of Microsoft.