Investors have been carefully witnessing the recent activity of Microsoft Corporation (NASDAQ:MSFT) stock. At the end of the day, it’s only a stock’s performance that matters. With this in mind, it’s worth taking a look at the chart to get a sense of where it might be headed in the future.
How has the stock performed recently?
Microsoft Corporation (NASDAQ:MSFT) in the last month has increased +4.69%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 15%. After the latest session, which saw the stock close at a price of $82.53, MSFT sits below its 52-week high. Microsoft Corporation (NASDAQ:MSFT) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that MSFT may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for MSFT is 62.06%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 57.39%, tells a similar story, and suggests that MSFT currently trades in neutral territory.
What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. Microsoft Corporation (MSFT) average trading volume of 23,601,984 during the past month is 7.63% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
What do the analysts think?
MSFT is currently undervalued by -9.95% relative to the average 1-year price target of $91.65 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 1.90, which implies that analysts are generally bullish in their outlook for MSFT over the next year.
How risky is the stock?
When predicting the future performance for a stock, it’s also important to take into account risk. To do this, analysts often use a stock’s beta, which measures the stock’s volatility relative to the overall market.
Microsoft Corporation (NASDAQ:MSFT) has a beta of 1.00, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. MSFT therefore has a above average level of market risk. During the past couple of weeks, MSFT average daily volatility was 8.95%, which is 6.1 percentage points lower than the average volatility over the past 100 days.