Microsoft shares hold steady as Guggenheim cuts rating to sell
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Microsoft (NASDAQ:MSFT) shares remained near their breakeven as investors didn't show up any high degree of concern about the company after Guggenheim analyst John DiFucci cut his rating on the software giant's stock to sell.
In a research note, DiFucci said that when Microsoft (MSFT) reports its next quarterly results, "we don't necessarily expect Microsoft to miss [estimate] numbers," but the company could disappoint investors with its forecasts for its 2023 fiscal second quarter and full-year results.
Part of that disappointment could be from Microsoft's (MSFT) small-and-medium-sized business [SMB] customers. DiFucci said that Microsoft (MSFT) "has greater exposure to the SMB market than any other name in our coverage universe" and SMB customers typically have a harder time recovering from economic slowdown than their enterprise-sized brethren.
DiFucci also said that sentiment around Microsoft (MSFT) could be concerning of the near to midterm as Wall Street assesses recent comments from Chief Executive Satya Nadella about how the company is likely to face market challenge for the next two years.
Wall Street analysts have a consensus strong buy rating on Microsoft's (MSFT) stock, while Seeking Alpha authors have a hold rating on the company's shares. Seeking Alpha's Quant System, which historically outperforms the stock market, also gives Microsoft (MSFT) shares a rating of sell.