Technology giant Microsoft Corporation (NASDAQ: MSFT) recently revealed that it has entered into an agreement with the Communications Workers of America (CWA) to let Activision (ATVI) employees unionize easily.
Shares of Microsoft fell 4.2% on Monday. The stock, however, pared its losses slightly to close at $245.13 in the extended trading session.
Details of the Agreement
Microsoft had announced plans to buy Activision in January for $68.7 billion. The deal, which is expected to conclude next year, has been facing various regulatory hurdles.
Microsoft’s labor neutrality agreement with the CWA will ensure smoother communications between employees and union representatives. The agreement, which will come into effect 60 days after the closure of the deal, allows employees either to embrace or reject a union.
The move could somewhat lessen the scrutiny from the Federal Trade Commission (FTC), which has been closely reviewing the deal to maintain healthy competition in the videogame market.
Stock Rating
On June 13, Jefferies analyst Brent Thill assigned a Buy rating to the stock with a price target of $320, which implies upside potential of 32.1% from current levels.
Consensus among analysts is a Strong Buy based on 24 Buys and one Hold. MSFT’s average price target of $354.92 implies upside potential of 46.5% from current levels. Shares have declined 6.8% over the past year.
Investors Are Positive
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on MSFT, as 8.5% of the top portfolios tracked by TipRanks increased their exposure to MSFT stock over the past 30 days.
Conclusion
By signing the labor neutrality agreement, Microsoft has addressed a vital regulatory hurdle and moved a step further in completing the Activision deal.
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