Whether to buy Microsoft stock is a question investors started pondering last year as the iconic tech company shed its decade-long status as a perennial laggard.
As Microsoft Corp. (Nasdaq: MSFT) stock soared nearly 40% from November 2013 to November 2014, investors were eager to jump on board.
But since then, investors have had reason to wonder if it's still a good idea to buy MSFT stock.
The MSFT stock price peaked at $50.05 in November 2014, but then began to slide. Microsoft stock was as low as $40.12 on April 2.
A disappointing earnings report in late January chopped 9% off the Microsoft stock price in one day. But a strong earnings report in April helped the Redmond, Wash.-based company regain that lost ground and then some.
The confusing price action has left Microsoft stock down nearly 4% on the year, slightly worse than the market averages. MSFT closed at $44.40 on Monday.
And as the following price forecasts show, analysts can't seem to make up their minds…
Analysts Can't Agree on MSFT Stock
Back in April, both Goldman Sachs Group Inc. (NYSE: GS) and Citigroup Inc. (NYSE: C) put an unusual "Sell" rating on MSFT. Citi reiterated that rating this week along with its gloomy $37 one-year price target.
Another firm, Wunderlich Securities, initiated coverage of Microsoft in early June, but don't expect a tiebreaker. Wunderlich rates MSFT stock a "Hold."
The Microsoft naysayers generally share these concerns:
- Slumping PC sales will hurt Windows revenue despite the upcoming release of Windows 10.
- The plan to offer Windows 10 as a free upgrade for Windows 7 and Windows 8 users will also eat into revenue from that division.
- Cloud businesses with lower margins could cannibalize its Windows and Office cash cows.
- While Microsoft's cloud businesses are growing rapidly, it's not enough to compensate for declines in other divisions.
- The strong U.S. dollar continues to drag on earnings.
- Suspicions are that another round of layoffs is imminent.