Apr 26, 2022
The stock is overvalued given the PE of 29.44 and little growth.
Sell Microsoft as the market turns bearish.
Microsoft Corporation (NASDAQ:MSFT) gained 2.44% on Monday to close at $280.72. The stock regained the losses recorded last Friday. However, bearish momentum remains. The recent trend creates the need to re-evaluate the stock’s performance.
Microsoft is a wide-moat technology company. It is able to consistently grow revenues even though the growth rate is low. Microsoft is projected to remain fundamentally strong. The main challenge is in finding new avenues for growth.
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At the price of $80.72, Microsoft is trading at a PEG ratio of 2.37. This shows that Microsoft is potentially overvalued. The PE is recorded at 29.44. The stock has poor ratings on momentum, value, and growth investment styles. Microsoft is a sell owing to the performance challenges.
MSFT crossed below the 50-day average, signaling bear control
Source – TradingView
Technical analysis indicates bearish momentum build-up. The MACD’s divergence from the signal continues to expand below the oscillator. The stock is trading below the 50-day moving average. The 10-day and 20-day averages continue to sink.
This is the first time in more than two years that the share price moved below the 50-day average. Ordinarily, Microsoft triggers buy signals when the price touches the 50-day average. Current market jitters indicate that Microsoft will not be sticking to its pattern and is therefore a sell.
Microsoft is a fundamentally strong company. Market pricing, however, shows that the stock is overvalued and bears have taken control. The analysis recommends selling Microsoft.
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