Microsoft stocks are falling, but analysts expect the company to outperform

Microsoft shares have taken a small hit due to its recent earning reports. Last month, the tech giant shared that a declining 1% profit margin for the 2018 fiscal year. Stocks are now down 1.6% since the announcement.

However, Cowen, an investment and research firm, advises that the concern surrounding Microsoft’s expectations is overstated. CNBC reports that analysts expect Microsoft to be underselling themselves, just like they did this last fiscal year.

“We have confidence that the margin concerns on the Street will fade as the year progresses, and we remain bullish on MSFT’s opportunities over both the medium and long-term,” analyst Gregg Moskowitz wrote in a note to clients Monday entitled “Deeper look into FY18 margins reveals upside potential.”

Furthermore, the analyst also increased his Microsoft price up to $85 from $80, confident in the tech giant’s margin expansion.

“We believe total Office revenue (consumer + corporate) is poised to accelerate, Cowen’s cloud survey work has increased our confidence level in Azure’s [cloud computing business] long-term success, an improving annuity mix meaningfully raises visibility and reduces execution risk,” he wrote. “There are multiple levers of upside to FY18 revenue and EPS (namely, Azure, O365, gross margins, phone hardware sale and mix shift).”

Do you expect Microsoft to outperform the market this year or are you battening down the hatchet? Let us know your thoughts on MSFT stock prices this coming fiscal year.