Sign InMicrosoft Stock Faces Short-Term Bearish Trend but Shows Potential for Rebound Ahead
Summary
On September 6, 2024, Microsoft Corporation (MSFT) closed at $401.70 after a 1.64% decline, placing it in oversold territory with an RSI of 32 and suggesting potential for a rebound, although it remains below key moving averages and faces significant resistance at $408.49, while analysts maintain a bullish outlook with a consensus Buy rating and a target of $432.95 amid ongoing market volatility.
Technical Analysis
Microsoft Corporation (MSFT) closed at $401.70 on September 6, 2024, marking a decline of $6.69 (-1.64%) from the previous day. The stock is currently in oversold territory as indicated by an RSI of 32, suggesting potential for a rebound. With a 50-day moving average of $429.04 and a 200-day moving average of $411.23, Microsoft is well below these averages, indicating an overall bearish trend in the short term. The stock has established resistance at $408.49, while crucial support is observed at $399.61.
Volume figures are slightly below the average, with 18.28 million shares traded compared to an average of 19.69 million. The MACD remains positive at 2.12, hinting at potential upward momentum should the stock break above resistance.
Fundamental Analysis
Microsoft's market cap stands at approximately $2.99 trillion, reflecting its robust position in the technology sector. With an EPS of 11.80 and a PE ratio of 34.04, the stock appears to be fairly valued to slightly overvalued based on traditional metrics. The discounted cash flow analysis suggests an intrinsic value of approximately $458.54, indicating that the stock is undervalued at its current price level.
Positive analysts' sentiment is reflected in the breakdown of ratings, with a consensus rating of "Buy," supported by 34 "Buy" ratings versus 2 "Sell" ratings. The projected target consensus is $432.95, with the potential high reaching $600. This offers a promising upside should the stock rebound.
The upcoming dividend yield of 0.19% is relatively modest, but the next dividend declaration scheduled for September 12, 2024, indicates ongoing shareholder returns, albeit at a low rate.
Performance Predictions
For the next trading day on September 9, 2024, Microsoft may experience a slight rebound given the oversold conditions and approaching support levels. A break above the resistance at $408.49 could suggest a recovery towards the 200-day moving average.
Over the upcoming week, if bullish momentum continues and if positive market trends support tech stocks, MSFT may progressively approach its target consensus price of $432.95. Conversely, failure to hold above support could lead to further weakness.
Long-term Investment Potential
Considering Microsoft’s financial health and growth prospects, it offers compelling long-term investment potential. The strong fundamentals, combined with robust DCF valuations, indicate that MSFT could be a solid part of a diversified portfolio. If macroeconomic conditions stabilize and the technology sector rebounds, the stock could recover significantly, returning to its previous highs. Given its current pricing in relation to intrinsic value and analysts’ expectations, MSFT categorizes as a 'Hold' candidate. This designation reflects the stock's potential for a rebound amidst current oversold conditions, while advising caution due to recent declines and prevailing market sentiment. One may consider focusing on potential upside while being aware of the necessity of broader market factors and resistance levels in the near term.
