Will Microsoft (MSFT) Stock Be Affected Today by UBS Price Target Reduction?
NEW YORK (TheStreet) -- Shares of Microsoft (MSFT) - Get Report are flat at $41.39 in midday trading Monday as UBS cut its price target to $49 from $52, while maintaining its "buy" rating.
Analysts are lowering their estimates due to indications of weaker than expected first quarter PC demand and ongoing challenges in mobile, the firm said.
"Intel's (INTC) - Get Report recent pre-announcement of lowering its first quarter revenue estimates by 7%, sync up with our proprietary checks in Asia, which indicate meaningful quarter-over-quarter PC shipment declines due to weak January/February results and muted emerging market demand," UBS said.
UBS said that impact from FX has gotten worse, with the euro and dollar moving closer to parity, adding that it believes constant currency is what matters most.
"Ongoing transitional headwinds and a shift to the cloud likely have an additional near-term dampening effect as the company shifts incremental investments away from mobile and into other categories which may take additional time to bear fruit," analysts noted.
Despite these headwinds, analysts maintain their buy rating based on favorable valuation, especially given the transformation story taking shape, the firm said.
"Management is showing strong financial discipline around expenses, which could help earnings and margins, and the recently stepped up share buyback program should support the stock," UBS added.
UBS lowered its NTM earnings estimate to $3.18 per share from $3.33 per share.
Separately, TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
You can view the full analysis from the report here: MSFT Ratings Report
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