Microsoft Shares Slide 1.8% Amid Analyst Ratings and Earnings Boost

Microsoft Corporation (NASDAQ: MSFT) experienced a decline of 1.8% in mid-day trading on Thursday, October 30, 2023. The stock price fell to a low of $475.50 before settling at $478.43. During this trading session, approximately 25,543,173 shares changed hands, representing a 16% increase over the average daily volume of 22,046,486 shares. The stock had closed at $487.12 the previous day.

Analysts Adjust Price Targets

Various analysts provided insights on Microsoft’s stock performance following the drop. Oppenheimer reaffirmed an “outperform” rating, while Guggenheim set a price target of $675.00. Arete raised its price objective from $700.00 to $710.00 and issued a “buy” rating. Meanwhile, the Royal Bank of Canada reiterated a “buy” rating, and Melius Research increased its price target from $595.00 to $625.00.

Overall, the consensus rating for Microsoft is classified as “Moderate Buy,” with an average target price of $634.33, based on data from MarketBeat. Out of the analysts, two rated the stock with a Strong Buy, thirty-seven assigned a Buy rating, and four opted for a Hold rating.

Strong Quarterly Earnings Report

Microsoft last released its quarterly earnings on October 29, 2023, reporting earnings per share (EPS) of $4.13. This figure exceeded analyst expectations, which had forecasted an EPS of $3.65. The company reported a return on equity of 33.47% and a net margin of 35.71%. Revenue for the quarter reached $77.67 billion, surpassing the consensus estimate of $75.49 billion. This marked an 18.4% increase in revenue compared to the same period last year.

Looking ahead, Microsoft has set a guidance for Q2 2026, with analysts predicting an average EPS of 13.08 for the current fiscal year.

Microsoft also announced a quarterly dividend of $0.91, payable on December 11, 2023. Shareholders on record as of November 20, 2023, will receive this dividend, which represents an annualized dividend of $3.64 and a yield of 0.8%. This dividend reflects an increase from the previous quarterly dividend of $0.83.

Insider Transactions

In related news, insider Bradford L. Smith sold 38,500 shares of Microsoft on November 3, 2023, at an average price of $518.64, totaling approximately $19.97 million. Following the transaction, Smith directly owns 461,597 shares valued at about $239.4 million, marking a 7.70% decrease in his ownership.

Additionally, CEO Satya Nadella sold 149,205 shares on September 3, 2023, at an average price of $504.78, which amounted to around $75.3 million. After this sale, Nadella retains 790,852 shares, valued at approximately $399.2 million, reflecting a 15.87% decrease in his stake. Insider ownership remains minimal, at 0.03% of the company’s stock.

Institutional Investor Activity

Recent trading activity indicates notable interest from institutional investors. Several hedge funds have either increased their holdings or initiated new positions in Microsoft. Longfellow Investment Management Co. LLC raised its stake by 51.3% during the second quarter, now owning 59 shares valued at $29,000. Other notable movements include Westend Capital Management LLC, which boosted its stake by 386.7%, and Bayforest Capital Ltd, acquiring a new position valued at $38,000.

Currently, institutional investors hold approximately 71.13% of Microsoft’s stock, reflecting strong confidence in the company’s long-term prospects.

Microsoft Corporation continues to develop and support a wide array of software, services, devices, and solutions globally. Its offerings include productivity solutions like Microsoft Teams, Office 365, and various enterprise services, indicating its significant role in both consumer and business markets.