Microsoft Hits New 52-Week Low Amid Analyst Downgrade

Microsoft Corporation (NASDAQ:MSFT) recorded a new 52-week low of $367.24 in trading to kick start the week, as markets started the week risk-off, only to rally into the close. The new low of the year comes on the same day as Jefferies trimmed their price target on the stock to $500 (from $550).

Trading volume registered at 21.63 million shares, slightly below its recent daily average of 23.5 million, perhaps signaling a degree of investor caution amidst the current pullback. The recent downward move caps off a period of sustained weakness for the stock.

Over the past month, Microsoft shares have fallen by 3.37%, extending a more significant decline of approximately 10.3% since the start of the year. Zooming out further, the trailing twelve-month performance shows a loss of 11.58%, indicating that the software behemoth has lagged both the S&P 500 index and its peers within the US Software industry over the past year. This underperformance comes despite the company's significant investments and market leadership in high-growth areas like cloud computing and artificial intelligence.

Earnings and Guidance in Focus

Looking ahead, the market anticipates Microsoft's next earnings release for Q3 2025, expected around April 23. Consensus estimates point towards continued financial strength, with EPS projected between $3.17 and $3.23, and revenue anticipated in the range of $68.53 billion to $69.91 billion. Full fiscal year 2025 forecasts remain bullish, with analysts predicting EPS between $12.73 and $13.18 on revenue near $277.01 billion. Despite the strong Q2 results, the provided information suggests that guidance issued alongside the report, potentially hinting at a slight moderation in the explosive growth rate of Azure compared to the prior record quarter, may have tempered investor enthusiasm and contributed to the subsequent stock pressure.

Despite the current stock depreciation and bearish technical signals, Wall Street analysts overwhelmingly maintain a positive long-term view. The consensus rating on MSFT remains a “Strong Buy,” buttressed by a mean price target around $504. This indicates a belief among analysts that the recent pullback offers a significant buying opportunity, with substantial upside potential driven by Microsoft's enduring competitive advantages, cloud leadership, AI integration, and consistent earnings power. Furthermore, the company continues to reward shareholders with a quarterly dividend, last paid at $0.83 per share, providing a current yield of approximately 0.83% to 0.88%.

From a broader financial perspective, Microsoft boasts a market capitalization of $2.79 trillion. The company holds a price-to-earnings (PE) ratio of 30.22, a price/earnings to growth (PEG) ratio of 2.21, and a beta of 0.92.

In their latest earnings report, Microsoft announced a quarterly earnings per share (EPS) of $3.23, surpassing analysts' expectations of $3.15 per share. Microsoft's return on equity stands at 33.36% with a net margin of 35.43%. Analysts are forecasting the company to post earnings of 13.08 per share for the current fiscal year.

Microsoft stock has lost some of it's lustre in recent times, and with tech stalling out this year, MSFT has suffered. The long term powerful fundamental performance and a optimistic long-term analyst outlook are being tested by negative short-term price momentum, concerning technical indicators, and apparent market sensitivity to the rate of future growth, especially within its critical Azure cloud division.