Google is overweight and Microsoft is outperforming
JPMorgan senior analyst Doug Anmuth downgraded Google and has hacked his target by $70 to $600. The crux of the problem is mainly in the competitive digital advertising market (mostly from Facebook) and the Google transition to mobile search from desktop. Shares dropped to 52-week lows at $494.14. The 2015 revenue growth consensus is at 17.7%.
This is a complete turnaround from Anmuth’s start of year expectations for Google when he boosted his price target from $1,1000 to $1,305 while reiterated an Overweight rating and after seeing a 58% gain in 2013. Anmuth was reported by Streetinsider to say at the time, "Mobile queries and revenue are growing rapidly, but still account for a minority of Google’s search activity. However, as users become more comfortable and savvy transacting through mobile devices and Google delivers more efficient and better targeted ads through initiatives such as Estimated Total Conversions and Enhanced Campaigns, we expect mobile to become a bigger tailwind for the company in upcoming quarters."
MT4 chart: Google
Bank of America analyst Kash Rangan downgraded the outlook for Microsoft from neutral to underperform on cause for concern over the tech company’s outperforming share price.
The price target was cut to $47.
In February the majority of Microsoft’s business in the traditional model of Windows PC operating systems sales, licenses and upgrades transitioned to cloud computing. Microsoft’s success has been with business customers giving new vigour to compete with IBM and Oracle and with an increase in shares of 25% this year. But the plan has risks with gross profit growth lagging behind revenue growth as the transition takes place. The average price target across Wall Street analysts is $50. On the news from Bank of America, price of Microsoft shares dropped by $2.49 to 45.10.
MT4 chart: Microsoft
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