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.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.