Microsoft Corporation $MSFT Stake Cut by Cat Rock Capital Management LP

Key Points

• Cat Rock Capital cut its Microsoft stake by 19.4% in the second quarter, selling 48,310 shares and retaining 200,603 shares worth approximately $74.8 million. Microsoft remains 17.4% of the firm’s portfolio and its third-largest holding.
• Analyst sentiment remains positive: 43 analysts rate Microsoft a Buy, with a consensus “Moderate Buy” rating and an average price target of $592.15. Several brokerages recently raised their price targets, including Mizuho to $600.
• Microsoft reported quarterly EPS of $4.74 and revenue of $90.01 billion, beating estimates, while revenue grew 17.7% year over year. The company also increased its quarterly dividend to $0.98 per share, representing a 0.7% yield.

Cat Rock Capital Management LP trimmed its holdings in shares of Microsoft Corporation (NASDAQ:MSFT - Free Report) by 19.4% during the 2nd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 200,603 shares of the software giant's stock after selling 48,310 shares during the period. Microsoft comprises about 17.4% of Cat Rock Capital Management LP's portfolio, making the stock its 3rd largest position. Cat Rock Capital Management LP's holdings in Microsoft were worth $74,829,000 at the end of the most recent quarter.

Other institutional investors have also added to or reduced their stakes in the company. Nwam LLC raised its holdings in shares of Microsoft by 3.2% in the 2nd quarter. Nwam LLC now owns 236,996 shares of the software giant's stock valued at $88,404,000 after purchasing an additional 7,440 shares in the last quarter. Renasant Bank boosted its stake in shares of Microsoft by 1.4% during the second quarter. Renasant Bank now owns 7,129 shares of the software giant's stock valued at $2,659,000 after purchasing an additional 99 shares in the last quarter. Gill Capital Partners LLC boosted its stake in shares of Microsoft by 0.5% during the second quarter. Gill Capital Partners LLC now owns 7,098 shares of the software giant's stock valued at $2,648,000 after purchasing an additional 33 shares in the last quarter. Rehmann Capital Advisory Group boosted its stake in shares of Microsoft by 1.6% during the second quarter. Rehmann Capital Advisory Group now owns 52,985 shares of the software giant's stock valued at $19,766,000 after purchasing an additional 851 shares in the last quarter. Finally, Orgel Wealth Management LLC increased its holdings in Microsoft by 3.6% during the second quarter. Orgel Wealth Management LLC now owns 5,521 shares of the software giant's stock valued at $2,059,000 after buying an additional 191 shares during the period. Hedge funds and other institutional investors own 71.13% of the company's stock.

Analyst Ratings Changes

A number of brokerages recently commented on MSFT. Stifel Nicolaus raised shares of Microsoft from a "hold" rating to a "buy" rating and boosted their price objective for the stock from $530.00 to $575.00 in a research note on Tuesday, September 22nd. Needham & Company LLC started coverage on Microsoft in a research report on Wednesday, September 23rd. They set a "buy" rating on the stock. Mizuho increased their target price on Microsoft from $510.00 to $600.00 and gave the company an "outperform" rating in a research report on Thursday, October 15th. Benchmark reissued a "buy" rating on shares of Microsoft in a research report on Friday, July 24th. Finally, Tigress Financial upped their price objective on Microsoft from $680.00 to $690.00 and gave the stock a "buy" rating in a research note on Wednesday, August 5th. Forty-three research analysts have rated the stock with a Buy rating, four have issued a Hold rating and two have given a Sell rating to the stock. According to MarketBeat, the company presently has a consensus rating of "Moderate Buy" and a consensus target price of $592.15.

Microsoft Price Performance

Shares of NASDAQ MSFT opened at $524.51 on Monday. The company has a debt-to-equity ratio of 0.07, a quick ratio of 1.22 and a current ratio of 1.23. The company has a market cap of $3.90 trillion, a PE ratio of 29.20, a P/E/G ratio of 1.68 and a beta of 1.10. The business has a 50-day simple moving average of $508.51 and a two-hundred day simple moving average of $446.69. Microsoft Corporation has a fifty-two week low of $349.20 and a fifty-two week high of $553.72.

Microsoft (NASDAQ:MSFT - Get Free Report) last posted its quarterly earnings data on Wednesday, July 29th. The software giant reported $4.74 earnings per share (EPS) for the quarter, beating the consensus estimate of $4.24 by $0.50. The firm had revenue of $90.01 billion for the quarter, compared to the consensus estimate of $87.62 billion. Microsoft had a net margin of 40.31% and a return on equity of 31.98%. The company's revenue for the quarter was up 17.7% compared to the same quarter last year. During the same quarter in the prior year, the company posted $3.65 earnings per share. As a group, equities analysts expect that Microsoft Corporation will post 19.66 EPS for the current fiscal year.

Microsoft Increases Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, December 10th. Shareholders of record on Thursday, November 19th will be given a dividend of $0.98 per share. The ex-dividend date of this dividend is Thursday, November 19th. This represents a $3.92 annualized dividend and a yield of 0.7%. This is a boost from Microsoft's previous quarterly dividend of $0.91. Microsoft's payout ratio is presently 20.27%.

Insider Activity at Microsoft

In other Microsoft news, EVP Takeshi Numoto sold 4,810 shares of the business's stock in a transaction that occurred on Tuesday, August 4th. The shares were sold at an average price of $496.48, for a total transaction of $2,388,068.80. Following the sale, the executive vice president owned 42,677 shares of the company's stock, valued at approximately $21,188,276.96. The trade was a 10.13% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, EVP Amy Hood sold 7,305 shares of the company's stock in a transaction that occurred on Tuesday, October 13th. The shares were sold at an average price of $545.42, for a total transaction of $3,984,293.10. Following the transaction, the executive vice president owned 555,396 shares in the company, valued at $302,924,086.32. The trade was a 1.30% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 150,314 shares of company stock worth $75,404,992 in the last quarter. 0.03% of the stock is currently owned by company insiders.

Key Microsoft News

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Azure and earnings expectations remain strong. Bank of America reaffirmed its Buy rating and forecast approximately 44.8% Azure growth. Analysts expect quarterly results to be broadly in line with estimates, with Azure strength potentially offsetting heavy investment in AI infrastructure. Microsoft Stock Forecast: BofA Reaffirms Buy Ahead of Earnings
• Positive Sentiment: Microsoft’s custom silicon and security businesses could support future cloud margins. The Maia AI accelerator and other internally developed chips may reduce reliance on Nvidia, improve cost control and retain more economics from Microsoft’s AI services. Investors are also watching whether security growth helps offset data-center expenses. Microsoft: Security And Silicon Set The Stage For Cloud Margin Recovery
• Positive Sentiment: Medical AI results add another potential growth opportunity. Microsoft’s MAI-DxO reportedly diagnosed complex cases more than twice as often as general physicians in a simulation, strengthening the company’s positioning in healthcare AI, although commercialization and regulatory hurdles remain. Microsoft develops AI tool that can diagnose sequentially like a doctor
• Neutral Sentiment: The upcoming report is a major near-term catalyst. Investors will focus on Azure growth, Copilot adoption, AI monetization, capital expenditures, backlog conversion and management’s outlook. The stock is trading near its yearly high, raising expectations for a strong forecast. Microsoft's Earnings Problem: Even Great May Not Be Enough
• Negative Sentiment: AI spending and market conditions could pressure valuation and margins. Investors have recently sold some technology shares when companies raised infrastructure budgets, while a weaker overall market and higher oil prices have added volatility. Microsoft’s large data-center investment must translate into revenue growth to justify the spending. Microsoft Earnings Report To Focus On AI Momentum, Capex
• Negative Sentiment: Operational and product concerns remain. Microsoft withdrew from a U.K. data-center deal because of power-delivery delays, and Xbox cloud-streaming price changes have generated customer friction. Former CEO Bill Gates has also warned about AI safety risks, potentially increasing regulatory scrutiny. Microsoft pulls out of UK Nscale data centre deal over power delay

Microsoft Profile

Microsoft Corporation NASDAQ: MSFT is a global technology company that develops software, cloud services, devices and digital platforms. Its products and services are used by consumers, businesses, governments and educational institutions worldwide.

The company's principal offerings include the Windows operating system; Microsoft 365 productivity applications such as Word, Excel, Teams and Outlook; Azure cloud computing and infrastructure services; Dynamics business applications; and enterprise security solutions.

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