NEW YORK (TheStreet) -- Shares of Microsoft Corp. (MSFT) are down -0.74% to $38.92 in pre-market trade after Deutsche Bank (DB) downgraded its rating to "hold" from "buy," citing valuation and concerns over the closing of the Nokia unit acquisition.
The firm has a $42 price target for shares.
"At the time that we assumed coverage of MSFT shares in January 2014, our bullish call was rooted in a number of pending catalysts, including the CEO change, the likelihood of a big Xbox One print, a stabilizing PC market with better-than-expected business PC sales, share gains in enterprise software and our belief that Street sentiment towards the mega-cap incumbents (MSFT& ORCL) was too negative relative to the high-growth disruptors" the firm said in a note.
"Many of these catalysts have now played out, and the nearest-term event (closing of the NOK deal) may be a net negative. We conclude that at 13x our '15 EPS, the riskreward for the stock is now more skewed to a Hold rating." the note added.
TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."