Microsoft stock carries risk from Windows slowdown, analyst warns


Analysts are generally positive on Microsoft Corp.’s stock MSFT, +1.70%, but Guggenheim analyst John DiFucci just became one of only three analysts tracked by FactSet to set a neutral rating on the shares. The other 43 analysts surveyed by FactSet who cover Microsof rate the name at the equivalent of buy. DiFucci anticipates continued “hyper growth rates” for Microsoft’s Azure cloud-computing business, but he’s more worried about the near-term landscape for the company’s Windows business. “Despite evidence of the impact of a weakening PC market on Windows in F4Q22, we still see near-term risk to Windows consensus estimates,” DiFucci wrote. He added that while Windows “does not have as much impact to the top line as it once did, but it is still almost a quarter of total operating profit – creating more risk to bottom-line estimates.” Microsoft “will not be immune to the cyclical nature of demand,” according to DiFucci. He set a price target of $292 on the stock, which closed Thursday at $287.02. He recently initiated coverage of a number of software stocks in addition to Microsoft, and he instituted sell ratings on a number of big names, including Salesforce Inc. CRM, +1.69% and Snowflake Inc. SNOW, +0.48%. Microsoft shares have gained 12% over the past three months as the Dow Jones Industrial Average DJIA, +1.27% has risen about 5%.

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