Goldman Sachs Group Inc (NYSE:GS) restated sell rating on Microsoft Corporation (NASDAQ:MSFT) and slashed the price target to $28.00 from $30 earlier. Microsoft Corporation (NASDAQ:MSFT)’s shares declined Thursday after weak fourth quarter result, and analysts at Goldman expect the shares could face more downside, says a report via StreetInsider.
Reasons for the lower PT
Goldman analyst Heather Bellini said, “While enterprise PC demand trends remain relatively stable in their view, Microsoft’s take on the OEM market for September calls for another quarter of yoy declines similar to what was experienced in June . . .”
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Reasons behind the lower price target are new products with less Windows price tag along with piracy in the developing markets. These factors will result in the revenue decline. According to analysts, the mix shift will also bring down the net ASP for Microsoft Corporation (NASDAQ:MSFT), which will in turn affect operating margins of the segment. Additionally, growing capex will also affect EPS in the future.
For the fourth quarter, Goldman expects revenue and EPS of $81.8 billion and $2.61 compared to $85.1 billion and $2.96 previously.
Ratings from other analysts
Oppenheimer Research analyst has also lowered the price target on Microsoft stock from $39.00 to $37.00 in a report released on Friday. The research firm maintains “Outperform” rating on the stock.
Cowen and Company downgraded the Microsoft to “MarketPerform” in its research note. Also, analysts at Raymond James downgraded Microsoft Corporation (NASDAQ:MSFT)’s stock to “MarketPerform” in the research note to investors on Friday.
Analysts at RBC Capital have increased the price target on Microsoft Corporation (NASDAQ:MSFT) from $32.00 to $37.00, in its research note published on Wednesday. RBC capital now has “Sector Perform” rating on the stock.
Microsoft 4Q performance
Microsoft Corporation (NASDAQ:MSFT) posted weak earnings on July 18 with earnings per share coming in at $0.59, which were below the analyst expectations of $0.75. Microsoft posted revenue of $19.90 billion for the quarter, compared to analysts’ estimate of $20.73 billion. For the corresponding quarter of last year, software giant posted earnings per share of $0.73. Revenue for the current quarter increased 10.2 percent on a year-over-year basis. For the current fiscal, analysts expect Microsoft to post EPS of $2.75.
Microsoft Corporation (NASDAQ:MSFT) recently declared a quarterly dividend to be paid on Thursday, September 12. Shareholders of record on Thursday, August 15 will be paid a dividend of $0.23 per share, which totals to $0.92 annualized dividend and a dividend yield of 2.60 percent.