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Can Microsoft be a Long-Term Winner?
Microsoft Corp. (NASDAQ: MSFT) has fallen more than 23% in the first half of 2022, compared with the S&P 500 (SPX) loss of over 20%.
Macroeconomic uncertainty has caused relentless volatility in the market, pushing most of the indices down globally. Despite the broad sell-off in the market, the tech giant has emerged triumphant with upbeat quarterly numbers over the past few quarters, riding on its cloud strength and a diversified business model.
Additionally, the company expects decent numbers in the June quarter on the back of strength across all its segments, including Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. However, unfavorable foreign exchange movement is expected to be a spoilsport.
In the recent quarterly earnings release, Microsoft CEO Satya Nadella commented, “Going forward, digital technology will be the key input that powers the world’s economic output. Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less.”
Despite recording upbeat numbers, Microsoft could face the brunt of an impending recession. As a result, keeping an eye on economic issues, the company is taking cost-control measures such as a pause in hiring and other initiatives to weather the storm.
Nevertheless, in the fast-growing digital world, the wide acceptance of the company’s Azure and growing gaming business is likely to keep Microsoft afloat even in worsening economic conditions.
Wall Street’s TakeRecently, Morgan Stanley analyst Keith Weiss maintained a Buy rating and a price target of $372 (43.31% upside potential).
Consensus among analysts is a Strong Buy based on 26 Buys versus one Hold. The average Microsoft price target of $352.57 implies 35.82% upside potential from current levels.
Additionally, Microsoft scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Bloggers Weigh InBloggers seem enthused by the company’s fundamentals. TipRanks data shows that financial blogger opinions are 91% Bullish on MSFT, compared to a sector average of 65%.
Bottom-LineGiven Microsoft’s strong fundamentals, cloud strength, and long-term growth prospects, investors can consider the current price level as a promising buying opportunity.
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