MSFT (Microsoft Corporation) has been trading sideways following the release of the last quarterly earnings report in October. The stock has currently hit pause from its steady rise in price valuation. Analysts expect a strong price pullback from now till January 2021. Read on to know more.
MSFT stocks have been growing in terms of valuation since its sideways trading. However, the stock has always been one of the expensive stocks as is evident from its past trends. Some brokerages and equities research analysts are now of the opinion that since the price has become so expensive for this stock, there is a temporary but strong pullback coming ahead for Microsoft stocks. These stocks are likely to trade at a much lower price from now till mid-January, 2021.
Microsoft Corp. (MSFT) Pullback Will Be Temporary, Suggests Analysts
Microsoft stocks recently reported its earnings report for the next fiscal quarters. According to those, there have been approximately 28.5 times increase in the company’s earnings as suggested by brokerage-estimate reports. Such metrics are proving to be record highs when compared against the company’s metrics for the last five years that stand at 22.9.
Microsoft stocks have been stalling out over the past weeks. Despite that, the company saw a record high forward PE (Price to earnings) ratio. MSFT’s PEG ratio is expected to 1.7 with a compound growth of 14.5% annually for the next three years.
The strong fundamental metrics of the company is the sole reason that analysts expect this upcoming pullback to be temporary. Microsoft has remained stable throughout the worst of the coronavirus pandemic and still shows potential growth signs for the next couple of years. Historically, MSFT stocks have also shown a steady growth profile.
However, the valuation of the company that is currently skyrocketing will encourage a bear to place a huge bet on the decline of the company’s stock value. This is likely to bring the pullback for Microsoft stocks.