While many former tech high-flyers were already on the backfoot last year, the market’s tech giants kept charging ahead in 2021. The same cannot be said, however, of the leaders’ performance in this year’s bear market. None have been immune to the market conditions, and all are showing negative returns on a year-to-date basis. Microsoft (MSFT) has also succumbed; the shares are down by 31% since the turn of the year.
In the depressed economic climate, the company has laid off around 2,000 employees over the past few months while also slowing down on the hiring front. Not to mention, in the report for the fiscal fourth quarter (June quarter), the company delivered its slowest revenue growth since 2020 and missed bottom-line expectations for the first time since 2016.
That said, if you could count on one company coming out relatively unscathed from the current bear market, Microsoft is definitely a big contender.
At least that appears to be the view of Raymond James’ Andrew Marok. The analyst sees a “collection of sustainable advantages in the story including: 1) strong positioning in fast-growing, innovation-heavy markets including public cloud, gaming, and digital advertising; 2) significant scale advantages from the cumulative effect of years of investment; and 3) deep, established relationships with enterprise software purchasers and essentially universal brand recognition, which 4) positions Microsoft as a “low risk” vendor that can take share regardless of (or perhaps especially during) periods of soft economic conditions.”
Based on these comments, Marok has resumed coverage of MSFT stock with an Outperform (i.e., Buy) rating and $300 price target, based on a valuation “slightly below” its three-year historical average, due to “strong trends in the business slightly moderated by worries around the trajectory of enterprise IT spend if economic conditions worsen.” Nevertheless, the figure could still generate returns of 29% in the year ahead. (To watch Marok’s track record, click here)
Over the past 3 months, 30 analysts have chimed in with reviews of this stock, which break down as 27 to 3 in favor of Buys over Holds, all culminating in a Strong Buy consensus rating. The average target clocks in at $324.74, suggesting shares will climb 39% higher over the coming months. (See Microsoft stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
