Microsoft Corp shares retreated to record highs on Thursday as an analyst downgraded the stock despite Wall Street’s general agreement that the software giant was well diversified to handle the challenges posed by COVID-19 .
Shares fell to a low of $ 204.42 and were down 3.4% at $ 204.62, with the Dow Jones Industrial Average DJIA down 0.8%.
S&P 500 Index SPX down 0.8%,
And a 1.7% drop in the tech-heavy Nasdaq Composite Index comp
As of late Wednesday, Microsoft forecasted Wall Street earnings for the end of its fiscal year, with record quarterly revenue of $ 38 billion, and forecast revenues that were substantially lower than analysts’ expectations Or was slightly higher.
Oppenheimer analyst Timothy Horan “downgraded” Microsoft from an “outperform” to slow sales growth and margin expansion, as well as higher stock prices. Microsoft shares closed at a high of $ 214.32 on July 9, and are up nearly 31% year-to-date, with a 1% gain in the S&P 500 and an 18% rise in the Nasdaq.
“Service businesses generally lag behind the economy for six months or longer,” Horan said. “Major business failures and employees working in large enterprises will hurt MSFT’s revenue growth. Facing difficult revenue comps for the next year, the stock has historically traded at high multiples. ”
Morgan Stanley analyst Keith Weiss, who is overweight and a target of $ 230 price, said Sioviaidi -19 Microsoft Exposure to benefit IT trends of the epidemic “unmatched”.
“While not immune to weak macros, digital transformation and the growing preference for a comprehensive solution suite enable Microsoft to maintain momentum through a difficult environment,” Weiss said.
Not only did Microsoft’s Azure cloud computing platform benefit from work-at-home and asylum directives, but also from the company’s gaming division, software-as-a-service products, teams communications and collaboration platform and Dynamics 365 product . The line that Salesforce.com Inc. Competes directly with CRM,
Mizuho analyst Greig Moskowitz, who has a rating and a price target of $ 225, said Microsoft’s Azure business had “increasing cloud success,” noting the “economic pressure associated with COVID” and 22% year-over-year. Has been deployed compared to the increase of. – Fire quarters.
“In short, we are not stunned by the slightly greater Azure revenue slowdown this quarter,” Moskowitz said. “Rather, we believe Azure will become increasingly more powerful.”
Jefferies analyst Brent Thill, who has given Microsoft a buyout and a $ 240 price target, said the company remains a pillar of software “despite the noisy quarter”. Thill also defended the slowdown in Azure development.
Theil said, “The increase in growth was due to COVID-affected industries, customers optimizing their spending and some delayed decisions.”
Of the 33 analysts covering Microsoft, 29 have bought the ratings. According to FactSet data, 18 of 18 increased their price target to the stock, while one lowered its price, resulting in an average price target of $ 227.59.