Microsoft Stock Slumps On Downgrades

Shares of Microsoft Corp. slid 7.9% in premarket trade Tuesday after the company's disappointing outlook triggered analyst downgrades. J.P. Morgan downgraded Microsoft to neutral from overweight and reduced its price target to $47 from $53. A group of analysts at the brokerage said the downgrade reflected Microsoft's spending projections. "Microsoft will not exercise as much spending discipline as we had anticipated," the analysts said. They reduced their fiscal 2015 earnings per share forecast on Microsoft by 8%, and said the downward revision could delay the timeframe for shares to "sustainably cross above $50." Sterne Agee lowered its price target on the stock to $44 from $46, citing an outlook that it said would surely disappoint investors. "As fundamentals get reduced, we would expect the stock multiple to contract forcing investors to rotate into cloud-based companies such as CRM," Sterne Agee analyst Robert Breza said. Raymond James analyst Michael Turits said he remains positive on Microsoft's enterprise and move to the cloud, however he only reiterated his market perform rating on the stock, saying he thinks Microsoft is fairly priced at current levels and could face headwinds from higher spending and tighter margins and decelerating consumer demand for Windows.