Here's Why Stifel Upgraded Microsoft To Buy

Stifel analyst Brad Reback released a note earlier Thursday in which he upgraded Microsoft Corporation MSFT to Buy, after having a Hold rating on the stock for two years, with a price target of $55. Reback was on CNBC to explain what makes Microsoft a buy at this juncture.

Windows Bottoming Out + Emerging Business Accelerate

"The bottom line for us is that the Windows business is bottoming from our perspective after a really difficult '15 and their emerging business, especially their commercial cloud businesses -- Office 365 and Azure -- are really beginning to accelerate and the profitability there is really picking up."

Related Link: Stifel: Time To Buy Microsoft, There's 'No Alphabet Soup Here'

Nokia: Now A Gift That's Going To Keep On Giving

Reback highlighted how Microsoft going to basics and booking a loss on its Nokia transaction is going to be actually beneficial for the company in the long run, saying, "This is a company in Microsoft that has, I would say over the last 18 months under new management really gotten back to its knitting and what it's good at which is delivering really strong software to enterprises.

And while the Nokia deal is an unmitigated disaster, no two ways about that. This is now from our perspective a gift that's going to keep on giving for the next two years as they kick a business that was burning $2 billion of operating expenses in '15 and probably take it to zero on a burn basis over the next two years," Reback said.