Microsoft Corp. (MSFT) continues to weather the market downturn and keep pace with the S&P 500. The stock declined by roughly 9% alongside the S&P 500’s similar loss over the past year. Hedge funds have been actively selling Microsoft’s shares, and the stock slid on the WhaleWisdom Heatmap to 14 from 4.
Microsoft is a multinational technology corporation that develops, licenses, and supports computer software, in addition to consumer electronics and personal computers. The company’s primary revenue sources come from three main business lines: Productivity and Business Processes, Intelligent Cloud, and Personal Computing. Microsoft provides systems and software to support businesses and entertainment. It is well known for its Windows operating system, Office software, Azure cloud and artificial intelligence, Xbox Games, and LinkedIn professional network.
Hedge Funds and Institutions Sell
Hedge Funds adjusted their portfolios in the first quarter, and the aggregate 13F shares held decreased to approximately 905.6 million from 917.8 million, a slide of roughly 1.3%. Overall, 33 hedge funds created new positions, 333 added, 40 exited, and 352 reduced their stakes. Institutions lowered their holdings by about 1.8% to 5.2 billion from approximately 5.3 billion. The 13F metrics for funds held rose over the past twenty years, more indicative of long-term investment potential.
Encouraging Multi-year Estimates
Analysts anticipate that earnings will rise, with increases in growth from the fiscal year 2023 to the fiscal year 2024 that could bring earnings to $11.96 per share by June 2024, up from a predicted $10.23 from June 2023. Year-over-year growth is estimated to bring revenue to approximately $220.2 billion by 2023 and $252.5 billion by 2024.
Analysts Cut Price Targets
Many analysts lowered price targets following Microsoft’s fourth quarter results. Analyst J. Derrick Wood of Cowen and Co. lowered the firm’s price target to $320 from $220 and kept an Outperform rating on Microsoft shares. Deutsche Bank analyst Brad Zelnick maintained a Buy rating on Microsoft. While fourth-quarter results were better than expected amid weaker customer demand for personal computers, Zelnick lowered the firm’s price target to $330 from $350. Stifel Institutional analyst Brad Reback kept a Buy rating on shares while reducing the firm’s price target to $300 from $320. Mark Murphy of JPMorgan Chase & Co. lowered the firm’s price target to $305 from $320 and kept an Overweight rating on shares.
Favorable Long-term Outlook
While Microsoft’s growth has slowed, there is optimism for future earnings. Many analysts lowered price targets after fourth-quarter results; however, estimated revenue through 2024 is encouraging, and the technology stock has an impressive performance history. Microsoft is a leader in the industry and presents an investment opportunity for patient investors.