The BofA Securities analysts noted this about the software behemoth’s results and the subsequent selling:
Microsoft reported solid third quarter results with revenue upside driven by Azure momentum (+50% year-over-year versus our initial 41%) and Windows (+10% year-over-year versus our 6%) fourth quarter guidance for sustained high teens PBP growth and low 20s IC growth highlights continued momentum. Reiterate Buy rating and raising price objective for revenue/free-cash-flow upside.
Investors in Microsoft stock currently receive a 0.88% dividend. BofA Securities raised its $300 price target to $310, well above the $276.77 consensus price objective. The shares closed at $254.56 per share, after retreating almost 3% on Wednesday.
This old-school semiconductor maker also trounced estimates, but disappointing guidance brought in the sellers. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.
Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. The company is a big Apple supplier, so the long-term outlook for this venerable leader makes it a safer bet for investors with less risk tolerance.
The stock was crushed after the solid first-quarter results, as guidance surprised Wall Street. The pullback in the share price is offering long-term investors the best entry point in some time.
The analysts said after reviewing the earnings:
Texas Instruments reported a solid first quarter 2021 sales of $4.29 billion, beating guidance by $300 million or 9%. Price objective is raised. Likes: Strength in Industrials, internal fab capacity promotes lead time stability, stable prices bodes well for share gains. Risks: Supply shortages unlikely to be resolved anytime soon, flat lining auto growth in the first quarter, inventories hit 4 year lows.
Investors receive a solid 2.25% dividend. BofA Securities lifted the price target from $200 to $210. That compares with the posted consensus target of $190.36. Texas Instruments stock was last seen Wednesday trading at $181.82, after pulling back almost 5%.
Two stocks traded higher on good news, and two sold off on good news. The bottom line for those with a long investment timeline is that these are all premier growth stocks and the companies are incredible leaders in their technology silos. They have long and proven track records and will be around long after 2021.