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On Tuesday, BofA Securities made an adjustment to its financial outlook for Microsoft stock (NASDAQ:MSFT), reducing the price target from the previous $510.00 down to $480.00. Despite this change, the firm has kept its Buy rating intact for the tech giant. According to InvestingPro data, Microsoft is currently trading at $387.81, with analyst targets ranging from $415 to $650, suggesting potential upside. The stock has shown significant strength with a 9.4% return over the past week, though it’s currently trading near its Fair Value.
The revision followed a series of discussions with nearly a dozen key System Integrator (SI) partners. According to BofA Securities analyst Brad Sills, the consensus from these conversations indicated that Microsoft’s deal activity during the third fiscal quarter of 2024 was more "in line" with expectations, which mirrors the sentiment from the second quarter. This perspective suggests a stabilization of growth rather than an exceedance of prior forecasts. InvestingPro analysis shows Microsoft maintains excellent financial health with an overall score of ’GREAT’, supported by strong profit metrics and robust cash flows.
Sills anticipates that Microsoft’s revenue for Q3FY24 will align closely with BofA Securities’ projection of $68.2 billion, marking a 10.3% year-over-year increase. There is potential for a slight revenue boost due to favorable currency exchange rates. The weaker US dollar is expected to have a negative impact on year-over-year growth, but only by 100 basis points, which is less detrimental than the 200 basis points originally guided by Microsoft. Recent data from InvestingPro shows the company’s impressive revenue growth of 15% over the last twelve months, with total revenue reaching $261.8 billion.
The adjustment in the price target reflects the analyst’s tempered expectations for Microsoft’s near-term growth, taking into account the information gathered from industry partners and the current currency dynamics. The maintained Buy rating suggests that, despite the revised price target, BofA Securities still views Microsoft as a favorable investment.
Investors and market watchers will be looking to see if Microsoft’s actual financial performance aligns with these projections and how the stock will respond to the evolving economic landscape and currency fluctuations.
In other recent news, Microsoft has been in the spotlight following UBS analyst Karl Kierstead’s decision to cut the company’s stock price target from $510 to $480 while maintaining a Buy rating. This adjustment comes ahead of Microsoft’s third-quarter earnings report, scheduled for April 30, 2025. Kierstead noted Microsoft’s recent slowdown in data center projects and suggested that these changes are not likely driven by AI demand. Meanwhile, the Trump administration’s tariff exemptions on electronics have positively impacted Apple (NASDAQ:AAPL), with the company leading gains among the Magnificent Seven stocks. KeyBanc upgraded Apple’s rating to sector weight due to this exemption, which also benefited other tech giants like Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), and Meta (NASDAQ:META). However, the Magnificent Seven stocks faced mixed reactions after China announced increased tariffs on U.S. goods, affecting companies like Tesla (NASDAQ:TSLA) and Apple. Additionally, OpenAI is preparing to release new AI models aimed at fostering innovative problem-solving across various fields, potentially attracting interest from major corporations. These developments underscore the dynamic nature of the tech industry and its ongoing global trade challenges.
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