Microsoft (MSFT) Upgraded to Buy: What Does It Mean for the Stock?

Core Viewpoint - Microsoft (MSFT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Positive Outlook for Microsoft - The upgrade reflects a positive outlook for Microsoft's earnings, which is expected to lead to buying pressure and an increase in stock price [3][5]. - For the fiscal year ending June 2025, Microsoft is projected to earn $13.27 per share, representing a 12.5% increase from the previous year, with a 1.5% rise in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade to Zacks Rank 2 places Microsoft in the top 20% of Zacks-covered stocks, indicating its strong earnings estimate revision feature and potential for market-beating returns [10].