Where Have All the Microsoft Corporation (MSFT) Bulls Gone?

Microsoft Corporation (NASDAQ:MSFT) short sellers believe it will decline in price. The most recent short interest data has been released for the September 28th settlement date, which shows a 5,334,523 share increase in total short interest for MSFT, to 48,402,349, a surge of 12.39% since September 14th. Average daily volume for Microsoft Corporation at the September 28th settlement jumped to 26,951,183, as compared to 23,380,143 at the September 14th report. That brought days to cover to 1.795927, a 2.5% decrease from the 1.842069 days to cover recorded at the prior short interest data release. You could look at analyst ratings. The average analyst recommendations at 1.7 suggests selling these shares. But the opinions of a small number of people, though sometimes influential, doesn’t always speak for the hundreds of thousands of traders on Wall Street.

Analysts are forecasting revenue to climb 13.7 percent to $27.9B in the next fiscal quarter, while earnings are seen soaring by nearly 14.29 percent to $0.96 per share. History has shown that shares in Microsoft Corporation have gone up on 21 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. In last reported earnings results, it earned $1.13 per share, better than the $1.08, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $30.1B, better than the $29.2B analysts expected. Earnings are estimated to increase by 19.3 percent this year, 15.06 percent next year and continue to increase by 12.42 percent annually for the next 5 years.

Microsoft Corporation (MSFT) will probably climb 12.76 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $160-month high price target. This represents a whopping 46.03 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $125, which represents a return potential of 14.08 percent when compared to the closing price of the stock of $109.57 on Friday, October 12. The lowest price target for the stock is $75 — slightly more than -31.55 percent from MSFT’s current share price.

The stock is currently hovering around the first support level of $107.38. Below this, the next support is placed in the zone of $105.19. Till the time, the MSFT stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 45.33 on daily chart, which may remain a cause for concern. If the price breaks below $105.19 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $111.5 mark may result into a pull-back move towards $113.43 level.

On 12th of October, Microsoft Corporation (NASDAQ:MSFT) shares ended higher after a volatile session. The shares accumulated 3.66 points or 3.46 percent at $109.57 with a heavy trade volume of 46.551 million shares. After opening the session at $109.01, the shares went as high as $111.24 and as low as $107.12, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $845 billion and now has 7.71 billion shares outstanding. Microsoft Corporation (MSFT) stock has lost -2.96 percent of market value in 21 trading days.

MSFT stock has a trailing 3-year beta of 1.28, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $3.9 a share in the trailing twelve months. The stock’s value has surged 28.09 percent year to date (YTD) against a rise of 42.08 percent in 12 month’s time. The company’s shares still trade -5.69 percent away from its 1-year high of $116.18 and 43.47 percent up from 52-week low of $76.37. The average consensus rating on the company is 1.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Shares of Microsoft Corporation (MSFT) are trading at a P/E ratio of 28.06 times earnings reported for the past 12 months. The industry MSFT operates in has an average P/E of 32.97. Its P/E ratio went as low as 13.38X and as high as 29.89 over the 5-year span. Further, it is sporting a 7.66 on the Price-to-Sales ratio. Compare this with the industry average P/S of 5.51. 65.2 percent is the gross profit margin for Microsoft Corporation and operating margin sits at 31.7 percent. Along with this, the net profit margin is 15 percent.

Let’s take a look at some insider activity at Microsoft Corporation (NASDAQ:MSFT) and see the pattern. The earliest insider trade took place on 09/10/2018. Capossela Christopher C parted with a total of 59.16 thousand shares of company at average share price of $108.71. The total for the sales was set at $6.43 million. After this transaction, the EVP, Chief Marketing Officer account balance stood at 167.23 thousand shares. The stock grew 0.79 percent since that insider sale. On 09/04/2018, Hogan Kathleen T, EVP, Human Resources, sold 40 thousand shares at a price per share of $111.31. This removed 4.45 million shares from the insider’s fortune and the stock saw a -1.56 percent retreat in value since the news became public. This transaction left 245.29 thousand shares in the EVP, Human Resources account.

On 09/04/2018, EVP, CFO Hood Amy performed a sale transaction worth $13.09 million. This sale at $110.9 each has eliminated 118 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -1.2 percent decrease since the transaction was reported. The insider now is left with 441.93 thousand shares remaining in the account. Nadella Satya, who performs the CEO job, sold 328 thousand shares for $35.9 million. The disposal occurred on 08/10/2018 was priced at $109.44 per share. The share price soared 0.12 percent since the reporting date. Nadella Satya now left with a stake of 778.6 thousand MSFT stock worth $85.31 million after the insider selling.

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