The Ratings Game: Microsoft’s stock has a ‘rich catalyst path ahead’ after underperforming, says Citi

Microsoft Corp. shares have lagged its technology peers in recent weeks, but Citi Research analysts think the stock is poised for better performance in the months to come.

The Citi team opened a positive 90-day catalyst watch on Microsoft’s stock
Monday, writing of a “a rich catalyst path ahead” into the end of the year.

“While still early, we believe shares could trade well into [fiscal first-quarter] earnings with [a] stabilizing PC market, better Azure inputs, and a revenue acceleration trend,” the analysts wrote.

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Citi also sees various artificial-intelligence developments that could help Microsoft, including the potential general-availability release of its Copilot software. Citi’s August customer checks found positive reception for the offering.

The team is encouraged as well by Microsoft Dynamics, an enterprise accounting and sales suite, which “may continue to emerge as a potential third leg of the MSFT growth story with accelerating growth driven by consolidation + AI tailwinds.”

The Citi call came as Microsoft shares have fallen 5% since the company posted earnings in late July, while the iShares Expanded Tech-Software Sector ETF
has risen 1% in the same span and Citi’s basket of tech peers had advanced about 5%.

Citi has a buy rating and $420 price target on Microsoft shares, which have gained 41% so far this year but lagged most of their Big Tech peers across 2023.

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