Written by Brenda Nakalema

Microsoft stock ‘still a strong buy.’ Earnings growth is one reason.

According to Morgan Stanley, Microsoft earnings could reach $20 share or more within a span of 5 years; because of …

According to Morgan Stanley, Microsoft earnings could reach $20 share or more within a span of 5 years; because of this, the stock is rated a “strong-buy” by the bank.

The stock still represents a strong bet for investors, especially those looking for assets with strong growth drivers, solid pricing power, and earnings growth that can beat inflation, said analyst Keith Weiss.

“Bottom line, Microsoft positions well against multiple secular trends,” he said.

According to Weiss, Microsoft (ticker: MSFT) might sustain a 15% revenue compound annual growth rate through the calendar year 2026, supported by two broad commercial growth opportunities. The first of these opportunities is Microsoft’s base of over 400 million information workers that are using the Office suite, all the way from Microsoft Teams to Defender endpoint security. His belief is that the total commercial office revenue base could top $60 billion in 2026.

The company’s cloud computing and data managing platforms for broader enterprise solutions present the second opportunity that could see the company wave healthy figures well into the coming quarters.

The following 5 years could spell huge success for Dynamics 365, which is set to be one of the fastest-growing businesses with Microsoft- its growth rate standing at about 23% CAGR. The enterprise software has been scaling faster than competitors Workday and ServiceNow at a similar level of scale.

Coupled with the expanding gross margins, the resulting growth contributes around $20 in earnings per share by 2026 and looks good when set against the current price to earnings multiple.

Weiss maintained an Overweight rating on the stock and a $372 price target. Shares of Microsoft gained 1.1% to $304. 29 on Tuesday.