MSFT - Microsoft Corporation

Technology | Software - Infrastructure

$359.84
-$13.27 (-3.56%)
REPORT DATE: 2025-04-05
DATA AS OF: 2025-04-05 00:57:55
All Sections
Short-Term Analysis
Long-Term Analysis
Entry Level Focus

SHORT-TERM ANALYSIS (<1 YEAR)

1. SHORT-TERM OUTLOOK
Critical
Technical Assessment
Bearish - Breaking below 50 & 200-day MAs
Catalyst Assessment
Trade war concerns, AI developments
Sector Rotation Factors
Tech sector experiencing rotation out
Sentiment Assessment
Mixed - Strong analyst support but market fear
Risk Level
Medium
2. TECHNICAL INDICATORS
Critical
$350 $375 $400 $425 $450 03/24 03/26 03/28 03/31 04/01 04/02 04/03 04/04 Price 50-Day MA 200-Day MA MSFT Price with 50-Day & 200-Day Moving Averages
50-Day Moving Average
$399.80
200-Day Moving Average
$420.85
RSI (14-day)
29.06
MACD Line
-7.15
Signal Line
-5.73
Bollinger Bands
Upper: $399.80 / Lower: $367.16
On-Balance Volume
83,726,700
Technical Assessment: Microsoft is showing significant weakness in the short term. The stock is trading below both its 50-day and 200-day moving averages, indicating a bearish trend. The RSI at 29.06 suggests the stock is oversold, which could present a bounce opportunity. However, the MACD line below the signal line and continuing to diverge negatively signals ongoing downward momentum. Recent price action has broken below the lower Bollinger Band, suggesting extreme selling pressure.
3. MARKET DATA
Critical
Current Price
$359.84
Previous Close
$373.11
Open
$364.13
Day Range
$359.49 - $374.59
52-Week Range
$359.48 - $468.35
Volume
48,685,644 (Avg: 23,683,187)
Market Cap
$2.68T
Beta
1.0
Market Assessment: Microsoft's share price is currently testing its 52-week low with significantly above-average volume (more than 2x normal), indicating strong selling pressure. This price action suggests institutional distribution may be occurring. The stock has declined over 23% from its 52-week high, entering correction territory. Despite the decline, Microsoft maintains its massive market cap of $2.68T, reflecting its continued importance in global markets.
4. VALUATION METRICS
High
Trailing P/E
29.00
Forward P/E
24.07
EPS (TTM)
$12.41
EPS Forward
$14.95
Price/Sales
10.22
Price/Book
8.84
Enterprise Value
$2.71T
EV/Revenue
10.34
EV/EBITDA
19.05
Valuation Assessment: Microsoft's valuation has become more attractive following recent share price declines. The forward P/E of 24.07 is approaching more reasonable levels compared to historical valuations, though still reflecting premium pricing for the company's growth and dominance. The price-to-sales ratio of 10.22 remains elevated relative to the broad market but is justified by Microsoft's high profit margins and recurring revenue model. The spread between trailing and forward P/E indicates the market is pricing in approximately 20% earnings growth.
5. GROWTH METRICS
High
Earnings Growth (YoY)
10.20%
Revenue Growth (YoY)
12.30%
Earnings Growth (QoQ)
6.80%
Revenue Growth (QoQ)
7.20%
Growth Assessment: Microsoft continues to deliver solid growth despite its enormous size. The 12.30% year-over-year revenue growth demonstrates the company's ability to expand in key areas like cloud services (Azure) and AI implementations. Earnings growth of 10.20%, while slightly trailing revenue growth, still represents strong performance for a company of Microsoft's scale. Quarter-over-quarter metrics indicate consistent sequential growth, albeit at a more modest pace than the annual figures.
6. ANALYST RECOMMENDATIONS
High
Target Mean Price
$503.86
Target Median Price
$500.00
Recommendation Mean
1.44 (Strong Buy)
Number of Analyst Opinions
51
Latest Recommendation
Strong Buy: 14, Buy: 39, Hold: 6, Sell: 0, Strong Sell: 0
Overall Sentiment
Strongly Bullish (Score: 1.14)
Analyst Assessment: Wall Street remains overwhelmingly bullish on Microsoft despite recent price declines. The mean target price of $503.86 represents a significant 40% upside from current levels. Notably, among 51 analysts covering the stock, none have Sell or Strong Sell recommendations, with the vast majority (53 of 59) rating it a Buy or Strong Buy. This strong consensus indicates professional analysts see the current price weakness as a buying opportunity rather than the beginning of a fundamental deterioration in Microsoft's business prospects.
7. MARKET COMPARISON
High
52-Week Change
-15.25%
S&P 500 52-Week Change
-2.47%
Sector Performance
-10.30%
Industry Performance
-8.75%
Peer Group Comparison
Underperforming larger tech peers
Relative Performance Assessment: Microsoft has significantly underperformed the broader market over the past year, with a -15.25% return compared to the S&P 500's -2.47% decline. While the technology sector as a whole has faced pressure, Microsoft's decline exceeds both sector and industry averages. This underperformance is notable given Microsoft's historical role as a market leader. Recent news suggests that trade war concerns and market rotation away from technology giants may be contributing factors.
8. FINANCIAL HEALTH
Medium
Total Cash
$71.55B
Total Cash Per Share
$9.63
Total Debt
$102.91B
Debt to Equity
34.00
Current Ratio
1.35
Quick Ratio
1.20
Interest Coverage Ratio
48.2
Financial Health Assessment: Microsoft maintains an exceptionally strong balance sheet with $71.55 billion in cash and cash equivalents. While the company does carry $102.91 billion in debt, this is very manageable given their cash position, profitability, and free cash flow generation. The current and quick ratios above 1.0 indicate strong liquidity, and the debt-to-equity ratio is reasonable for a company with Microsoft's stable cash flows. The company's financial strength provides substantial flexibility for continued investments in growth initiatives, acquisitions, and shareholder returns through dividends and share repurchases.

LONG-TERM ANALYSIS (>1 YEAR)

10. LONG-TERM OUTLOOK
Low
Business Model Assessment
Exceptional - Diversified revenue streams with strong recurring components
Competitive Position
Market leader with strong moats in multiple segments
Growth Trajectory
Positive - Strong cloud and AI positioning
Fundamental Valuation
Premium but justified by growth and stability
Risk Factors
Regulatory scrutiny, competitive pressures in cloud, AI investment returns
Long-Term Outlook Assessment: Microsoft's long-term prospects remain strong despite short-term market pressures. The company's diversified business model spans productivity software, cloud infrastructure, gaming, and emerging AI solutions. Microsoft's Azure platform continues to gain market share in the high-growth cloud computing space, while the company's aggressive investments in AI position it well for the next computing paradigm. The company's subscription-based revenue model provides stability and predictability, while its strong balance sheet allows for continued strategic acquisitions and research investments. Over a multi-year horizon, Microsoft remains well-positioned to capitalize on digital transformation trends across enterprises globally.
11. PROFITABILITY
Medium
Profit Margins
35.43%
Gross Margins
69.41%
Operating Margins
45.46%
EBITDA Margins
54.26%
Return on Assets
14.65%
Return on Equity
34.29%
Profitability Assessment: Microsoft demonstrates exceptional profitability across all key metrics. The net profit margin of 35.43% is remarkable for a company of Microsoft's scale and significantly exceeds industry averages. Strong gross margins of 69.41% reflect the company's premium pricing power and the high-margin nature of its software and cloud services. The return on equity of 34.29% demonstrates efficient use of shareholder capital, while the return on assets of 14.65% shows effective utilization of the company's asset base. These robust profitability metrics underpin Microsoft's ability to fund innovation while simultaneously returning capital to shareholders.
12. CASH FLOW ANALYSIS
Medium
Operating Cash Flow (TTM)
$118.55B
Free Cash Flow (TTM)
$74.07B
Capital Expenditure (TTM)
-$44.48B
Cash Flow Trend (3-Year)
Consistently increasing
FCF Conversion Rate
84.04%
Cash Flow Assessment: Microsoft generates exceptional cash flows, with $118.55 billion in operating cash flow over the trailing twelve months. While capital expenditures are substantial at $44.48 billion (primarily for data center expansion to support Azure cloud services), the company still produces $74.07 billion in free cash flow. This represents a strong free cash flow conversion rate of 84.04% of net income, indicating high-quality earnings. The robust and growing cash flow generation supports Microsoft's dividend payments, share repurchases, and strategic investments while maintaining financial flexibility.
13. OWNERSHIP DATA
Medium
Held Percent Insiders
0.06%
Held Percent Institutions
74.41%
Institutions Float Percent Held
74.45%
Shares Short
64,256,703
Short Ratio
2.58
Short Percent of Float
0.86%
Ownership Assessment: Microsoft's ownership structure is dominated by institutional investors, who hold 74.41% of shares. This high institutional ownership reflects confidence in the company's long-term prospects among professional money managers. Insider ownership is minimal at 0.06%, which is not unusual for a mature company of Microsoft's size. The short interest is very low at 0.86% of float, indicating minimal bearish sentiment among professional investors despite recent price weakness. The top institutional holders include index fund giants like Vanguard and BlackRock, ensuring a stable shareholder base.
14. RISK METRICS
Low
Audit Risk
9
Board Risk
5
Compensation Risk
4
Shareholder Rights Risk
2
Overall Risk
3
Risk Assessment: Microsoft's governance risk profile is generally favorable with an overall risk rating of 3 (low). Shareholder rights risk is particularly low at 2, indicating strong protections for investors. Compensation and board risks are moderate at 4 and 5 respectively, reflecting generally sound governance practices. The higher audit risk score of 9 may warrant monitoring but is not indicative of immediate concerns given the company's strong compliance history and financial reporting transparency. Overall, Microsoft's corporate governance practices remain strong compared to industry peers.
15. DIVIDEND INFORMATION
Low
Dividend Rate
$3.32
Dividend Yield
0.92%
Trailing Annual Dividend Rate
$3.16
Trailing Annual Dividend Yield
0.85%
5 Year Average Dividend Yield
0.84%
Payout Ratio
24.82%
Dividend Growth Rate (5-Year)
10.35%
Dividend Assessment: While Microsoft's current dividend yield of 0.92% is below the S&P 500 average, the company has consistently grown its dividend at a robust pace, with a 10.35% 5-year growth rate. Recent dividend increases have been significant, with the most recent quarterly payout rising from $0.75 to $0.83 (10.7% increase). The conservative payout ratio of 24.82% provides ample room for continued dividend growth while allowing significant reinvestment in the business. For income-oriented investors, Microsoft offers an attractive combination of moderate current yield with strong, sustainable dividend growth potential.
16. HISTORICAL PERFORMANCE
Medium
1-Month Return
-8.45%
3-Month Return
-12.33%
6-Month Return
-15.02%
YTD Return
-4.81%
1-Year Return
-15.25%
3-Year Return
35.60%
5-Year Return
162.77%
Performance Assessment: Microsoft has experienced significant near-term weakness across all short-term timeframes, with negative returns spanning 1-month to 1-year horizons. The 1-year return of -15.25% is particularly notable given the company's historical outperformance. However, longer-term performance remains impressive, with 3-year and 5-year returns of 35.60% and 162.77% respectively, highlighting the company's strong fundamental growth story over extended periods. The current weakness appears to be part of a broader technology sector correction rather than company-specific issues, as indicated by recent news about trade war concerns affecting the "Magnificent 7" tech stocks.
17. BASIC INFO
Low
Company
Microsoft Corporation
Industry
Software - Infrastructure
Sector
Technology
Employees
228,000
CEO
Mr. Satya Nadella
Founded
1975
Address
One Microsoft Way, Redmond, WA 98052-6399, United States
Website
https://www.microsoft.com
Company Assessment: Microsoft is one of the world's largest technology companies with a 50-year history of innovation. Under CEO Satya Nadella's leadership since 2014, the company has successfully transformed from a Windows-centric business to a diversified technology leader with strength in cloud computing, productivity software, and gaming. With 228,000 employees globally, Microsoft continues to demonstrate the ability to innovate at scale while maintaining its position as a core technology provider for enterprises worldwide. The company recently celebrated its 50th anniversary with Bill Gates sharing the original BASIC interpreter code that launched Microsoft in 1975.

RECOMMENDATION SUMMARY

SHORT-TERM RECOMMENDATION

HOLD
Entry Price Range:
$340.00 - $355.00
Target Price:
$400.00

LONG-TERM RECOMMENDATION

BUY
Entry Price Range:
$340.00 - $380.00
Target Price:
$500.00
Investor Suitability
Growth/Value
Position Sizing Recommendation
Large position

SUMMARY ASSESSMENT

Microsoft presents a compelling long-term investment opportunity despite near-term volatility. The company's dominant market position across multiple high-growth segments (cloud, AI, productivity software), exceptional financial metrics (35% profit margins, $118B operating cash flow), and reasonable valuation relative to growth prospects support a constructive long-term view. While short-term technical indicators suggest caution with oversold conditions (RSI: 29.06) and trade war concerns, the unanimous analyst bullishness (14 Strong Buy, 39 Buy ratings) and 40% upside to consensus targets highlight the disconnect between price action and fundamental outlook. Long-term investors should consider accumulating positions during this period of weakness, while shorter-term traders may wait for technical stabilization before entry.

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