Original bull Rick Sherlund (formerly Goldman, now Nomura) puts Microsoft (MSFT) back on his Buy list due to the "anticipated benefits of shareholder activism." ValueAct owns less than a 1% stake in the company, but is likely to have plenty of support as it presses its case for change says Sherlund. A proxy contest could be a catalyst (the company must be notified by August 30), but the board may just capitulate before that and offer a seat to someone amenable to the activist agenda.
He's cutting his EPS estimate as he thinks margins will be talked lower at the September 19 Financial Analyst Meeting, but "We do not think fundamentals matter so much over the next six months."
Shares +1.6% premarket.