Royal Bank of Canada Affirms 'Outperform' Rating for Microsoft

Royal Bank of Canada has reaffirmed its "outperform" rating for Microsoft (NASDAQ:MSFT) in a research note released to investors on Tuesday. The bank has set a price target of $500.00 for Microsoft's shares, suggesting a potential upside of approximately 20.59% from the stock's current price.

In addition to Royal Bank of Canada, other analysts have recently shared their opinions on Microsoft. Mizuho has increased its target price from $450.00 to $480.00, maintaining an "outperform" rating as of July 16th. BMO Capital Markets has slightly lowered its target from $500.00 to $495.00, also holding an "outperform" rating. On the other hand, Truist Financial has issued a "buy" rating with a price target of $600.00 as of October 28th. Meanwhile, DA Davidson downgraded Microsoft from a "buy" to a "neutral" rating with a new target price of $475.00, and Oppenheimer adjusted its rating from "outperform" to "market perform" on October 8th. Overall, one analyst has given a sell rating, three have assigned a hold rating, and a significant twenty-six analysts have offered a buy rating. The consensus rating for Microsoft is currently labeled as "Moderate Buy" with an average price target of $503.03 according to MarketBeat.

Microsoft Stock Overview

On Tuesday, shares of MSFT traded up by $6.17, reaching $414.63, with a total of 7,879,935 shares changing hands during trading. This volume is below the company's average of 20,365,828 shares. Microsoft has a market capitalization of $3.08 trillion and carries a price-to-earnings (P/E) ratio of 34.21. Its twelve-month stock performance ranges from a low of $353.35 to a high of $468.35. The stock has a 50-day moving average of $420.59 and a 200-day average of $424.74.

Recently, Microsoft reported its earnings on October 30th, revealing earnings per share (EPS) of $3.30 for the quarter, surpassing analyst expectations of $3.10 by $0.20. The company achieved a net margin of 35.61% and an impressive return on equity of 34.56%. Revenue for the quarter totaled $65.59 billion, exceeding forecasts of $64.57 billion, and reflecting a significant 16.0% increase year-over-year. Analysts predict an EPS of 12.96 for the current year.

Microsoft Share Buyback Plan

On September 16th, Microsoft’s Board of Directors approved a substantial share buyback program, allowing the company to repurchase $60.00 billion worth of shares. This buyback represents 1.9% of the company's outstanding stock, often viewed as a signal that the management believes the shares are undervalued.

Insider Transactions

In related news, CEO Satya Nadella sold 14,398 shares of Microsoft on August 23rd, totaling approximately $6 million. Despite this transaction, Nadella still retains 786,933 shares, worth over $328 million. Similarly, insider Bradford L. Smith sold 40,000 shares on September 9th for a total of around $16 million, and now holds 544,847 shares valued at about $219 million. Over the past quarter, insiders have sold a total of 190,629 shares, amounting to roughly $77.9 million, leaving insiders with a 0.03% stake in the company.

Institutional Ownership Trends

Recent institutional trading indicates that many investors have increased their stakes in Microsoft. For instance, International Assets Investment Management LLC raised its holdings by a whopping 48,526.1%, acquiring over 38 million shares. Swedbank AB also made a notable new investment worth approximately $5.6 billion. Other institutions have made significant purchases as well, leading to 71.13% of Microsoft’s stock being owned by hedge funds and other institutional shareholders.

About Microsoft

Microsoft Corporation is a leading technology company that develops and supports a wide range of software, hardware, services, and solutions globally. Its offerings include productivity tools such as Office and Microsoft Teams, along with cloud services and security solutions.

Microsoft, Stock, Performance