Over the last two years, Microsoft Corp.’s (MSFT) stock has been on a tear – rising by over 80% since the beginning of 2013. After hitting a recent high of $50.05, the company’s market cap breached the $400 billion mark.
But while the company’s shares have enjoyed success in the markets, some analysts believe it has been unwarranted – particularly Jefferies equity research analyst John DiFucci.
In a note to investors, DiFucci and his team initiated coverage on MSFT with an “underperform” rating and a $40 price target.
They said their stock rating for Microsoft Corporation (NASDAQ:MSFT) was based on their “fundamental view of an exceptionally successful, dominant company facing unprecedented challenges and a stock price that posted sharp gains purely on expectations in operational performance as a result of shareholder activism and new management.”
Furthermore, they believe that will remain very much like its old self for some time under its new management. DiFucci believes, “the more things change, the more they stay the same,” for the Washington-based software company.
So does this mean it’s time to sell?
Well, not so fast… according to RBC Capital, BMO Capital Markets, FBN Securities, FBR Capital, Deutsche Bank, and Barclays.
Analysts at these research firms are bullish on the stock – which could offset the negative publicity and potentially be the catalyst that drives Microsoft’s valuation higher this year.
For example in September, analysts at RBC Capital placed an Outperform rating on Microsoft and increased their price target from $47.00 to $54.00.
In October, analysts at BMO Capital initiated coverage on shares of Microsoft with a Market perform rating. They set a target price for Microsoft at $48.
Also in October, analysts at FBN Securities initiated coverage on shares of Microsoft and set an Outperform rating and a $55.00 price target on the stock.
And similarly, analysts at FBR Capital, Deutsche Bank, and Barclays have all placed outperform, buy, and overweight ratings on the stock.
In fact according to Benziga, of the research firms who have released notes on MSFT to investors since July, 7 out of 10 analysts have given the stock high ratings – either outperform, overweight, or buy. And out of the 10 analysts, the average price target is $50.70 per share – which represents a 5.42% premium from the current price.
All of this is great news for investors who have largely stood on the sidelines, contemplating an entry point.
With commercial revenue up 10% to 12.28 billion, their Devices & Consumer Revenue up 47% to $10.96 billion, the Xbox One launching in China, and Surface Pro revenue gaining momentum, Microsoft Corp. looks poised to continue its strong performance well into the future.
Yours in profits,
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