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Reliable Microsoft Bull Merrill Gives in, Removes 'Buy' Rating

Microsoft Representative Holding Surface Tablet


After remaining bullish on Microsoft (MSFT) since the financial crisis of 2008, Bank of America Merrill Lynch (BAC) finally removed its “buy” rating on the software maker amid a “lack of momentum” for Windows 8.

Shares of the tech behemoth ticked slightly lower on the loss of optimism from a key bull, putting them on pace to extend their 12-month slump of nearly 9%.

“We were hoping that [Microsoft] would make a bold foray with Windows 8 into smartphones and tablets,” BofA Merrill wrote in a note published Thursday morning downgrading the stock to “neutral,” according to MarketWatch. “Now, six months post launch, despite more available touch-based devices, Windows 8 lacks momentum, challenging our optimism."

With those concerns in mind, BofA Merrill trimmed its 2013 revenue target to $79.3 billion from $79.9 billion. On average analysts are calling for revenue of $79.5 billion.

The firm now projects full-year EPS of $2.77, which is below the consensus view of $2.84 and the firm’s prior call for $2.91.

BofA had kept a “buy” rating on Microsoft since September 2008 when the stock slumped to around $25 during the worst financial crisis since the Great Depression.

Microsoft eventually tumbled as low as $15 in March 2009, but today it is still sitting at just $28.56.

Shares of the Redmond, Wash.-based parent of Xbox and Skype slipped 0.5% to $28.42 in premarket trading Thursday. Microsoft has rallied 6.9% so far this year, slightly outperforming the 6.6% gain on the Nasdaq Composite.

Follow Matt Egan on Twitter @MattMEgan5