The Microsoft Bull Run Isn't Over Yet

Argus said in a note on Tuesday Microsoft Corporation MSFT shares, which have had a strong run already, have further to run. The firm said it thinks the shares could move even more upward, as the company's commercial and public cloud business propel growth.

The firm upgraded shares of Microsoft from Hold to Buy, with a price target of $95.

Analyst Joseph Bonner believes the company is well positioned to grow commercial revenue as the process of digital transformation continues both in the U.S. and internationally. Bonner sees the Azure cloud services, Dynamics CRM and Office 365 as primary growth drivers for the company.

Argus pointed to Gartner's estimate that Microsoft has a 7 percent market share in the public cloud, a distant second to Amazon.com, Inc. AMZN, although much greater than other competitors.

The firm also noted that CEO Satya Nadella has pivoted the company toward the high-value commercial and cloud applications, shaking off the past missteps in the wireless phone handset market.

Meanwhile, the firm said the consumer side of the business remains steady. The firm expects the segment to show better profitability as it laps the disposal of the feature-phone business in November.

The firm raised its 2018 earnings per share forecast for Microsoft from $3.24 to $3.39 and that for 2019 from $3.54 to $3.62.

"Microsoft is also one of the few tech companies in our coverage group that pays a growing dividend, which it recently raised by 7.6%," the firm added.

"This indicated yield is about 2%."