Wall Street Zen has upgraded its rating for Microsoft Corporation (NASDAQ: MSFT) from “hold” to “buy,” following the company’s impressive quarterly earnings report released on July 30, 2023. The upgrade comes as a part of a trend among various financial institutions reassessing their positions on the tech giant amid strong financial performance.
Analysts Show Confidence in Microsoft’s Growth
In addition to Wall Street Zen’s upgrade, several other brokerages have expressed positive outlooks on Microsoft. The Royal Bank of Canada reaffirmed a “buy” rating with a price target of $640.00. Similarly, Barclays maintained an “overweight” rating with a price target of $625.00. On July 31, 2023, Mizuho raised its price objective from $540.00 to $625.00 while giving Microsoft an “outperform” rating.
Recent reports indicate that one analyst has rated the stock as a “Strong Buy,” while thirty-one others have given it a “Buy” rating, and only two have issued a “Hold” rating. According to MarketBeat data, Microsoft currently holds a consensus rating of “Moderate Buy” with an average target price of $617.63.
Financial Performance Exceeds Expectations
Microsoft’s recent earnings report showcased a robust performance, with the company reporting earnings per share (EPS) of $3.65, surpassing analysts’ expectations of $3.35 by $0.30. The company achieved a net revenue of $76.44 billion, exceeding predictions of $73.79 billion. This marked an 18.1% increase in revenue compared to the same quarter the previous year, when the firm posted an EPS of $2.95.
As part of its ongoing financial strategy, Microsoft has set its guidance for Q1 2026 at an EPS of $13.08 for the current year, reflecting the company’s confidence in its growth trajectory.
Dividend Update and Insider Activity
Microsoft has announced a quarterly dividend of $0.91, which will be distributed on December 11, 2023, to investors of record as of November 20, 2023. This new dividend represents an increase from the previous quarterly dividend of $0.83, contributing to an annualized dividend yield of 0.7%. The company’s dividend payout ratio stands at 24.34%.
In related news, Satya Nadella, Microsoft’s CEO, sold 149,205 shares of the company on September 3, 2023, at an average price of $504.78, totaling approximately $75.3 million. Following this transaction, Nadella retained 790,852 shares valued at around $399.2 million, indicating a 15.87% decrease in his position. This sale was disclosed in a filing with the Securities and Exchange Commission.
Additionally, Takeshi Numoto, Executive Vice President, sold 4,850 shares on August 12, 2023, for a total of approximately $2.56 million, which represented an 11.03% decrease in his ownership.
Institutional Investors Increase Stakes
Recent activity among institutional investors has also been noteworthy. Norges Bank acquired a new stake in Microsoft valued at approximately $50.5 billion during the second quarter. Kingstone Capital Partners Texas LLC dramatically increased its position by acquiring over 90 million shares, bringing its total holdings to 90,549,369 shares valued at around $45 billion.
Other institutional investors, such as Nuveen LLC and GAMMA Investing LLC, have also expanded their investments significantly. Collectively, institutional investors now hold approximately 71.13% of Microsoft’s outstanding shares, reflecting strong confidence in the company’s future prospects.
As Microsoft continues to build on its financial success, analysts and investors alike are keenly watching its developments, signaling a robust outlook for the technology giant moving forward.
