Microsoft shares closed Friday at $32.08, up more than 24% for the year to date. Before last week, the stock hadn't seen the north side of $32 since early 2008. There is genuine excitement in the Valley and on the Street about Windows 8, the latest version of the company's flagship operating system software; the company is getting good reviews for Windows Phone 7; and there is growing buzz about Office 15.
In Barron's over the weekend, Neuberger Berman Partners Fund portfolio manager Eli Salzmann laid out the case for hanging on to the stock for further gains. The piece notes that Salzmann's fund bought the stock at $24; he thinks the stock is going to blow past the $40 level sometime in the next 12-24 months. The last time the stock topped $40? mid-2000.
Salzmann told Barron's that he thinks the company has "dramatic upside, even for a large-cap, asserting that the stock could earn more than $3 a share next year. (I presume he means the June 2013 fiscal year; Street consensus is for $2.69 for FY 2012, and $3 even for 2013.) At $40, the stock would be trading just a hair above 13x next year's earnings.
Here's a look at Microsoft's recent stock performance; you can play with the chart to see the how the stock has acted over other time periods:
