Microsoft (MSFT) Sell Rating Reiterated at Goldman Sachs
Goldman Sachs maintained a Sell rating on Microsoft (NASDAQ: MSFT) and lowered its price target to $38.00 (from $39.00). Comments follow soft Q2 results. Analyst Heather Bellini continues to see EPS pressures going forward.
"For the fifth quarter in a row, MSFT guided out quarter revenues and EPS at the midpoint below the Street (implied F3Q15 guide of $20.6-21.4bn/ $0.49-0.51 vs. consensus prior to the print of $23.8bn/$0.69). As expected, we see consensus estimates for F3Q15, F4Q15 & FY15 & FY16 moving lower post the print. We lower our FY15 EPS (incl. R&I) from $2.47 to $2.33 and FY16 from $2.86 to $2.76 (consensus $2.68 and $3.15, respectively)," said Bellini.
"We continue to believe that CEO Satya Nadella and CFO Amy Hood are making the right moves as they refocus the company on platform and productivity offerings for dual users. As we have stated in the past, we view the streamlining of the company’s operations and subsequent cost reductions as bold yet necessary steps that will serve to offset the impact of the company’s model shift. That said we see EPS as continuing to be pressured going forward and highlight five challenges for CY15: 1) negative estimate revisions, 2) gross margin pressure due to mix shift, 3) headwinds as ASPs and mix of PCs change, 4) Windows 10 is likely to usher in pricing changes, and 5) tough comps in commercial licensing," she added.
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Shares of Microsoft closed at $47.01 yesterday.