Shares of Microsoft (MSFT) - Get Report started off the day strong, up almost 1% on Thursday to new all-time highs. The stock; however has struggled to hold those gains as selling pressure picks up in the broader markets.
Helping propel the stock higher was a price target bump from Wedbush. Analyst
Dan Ives raised his target to $260 from $220; implying more than 20% upside from Wednesday’s close.
Ives argues that the coronavirus pandemic is driving up demand for remote work; something that is playing into Microsoft’s strengths.
Microsoft's momentum could still be in its early days he added; while maintaining the stock as a top pick and keeping its overweight rating.
Now the question turns becomes whether Microsoft can climb to $260. While it’s a lofty target — given that Microsoft stock is already up 35% this year and 55% over the past 12 months — it’s also within reason.
Remember, Microsoft's revenue is relatively insulated from the negative impact of Covid-19; at least so far. Perhaps that gives the stock room to run. Let’s look at the charts.
I like the way Microsoft stock trades up into resistance; fails at it a few times, then eventually powers through.
We saw that price action in mid-2019 too, with $140 acting as resistance throughout the summer. Finally, shares gapped above this mark in October and went on a powerful run until the coronavirus selloff crushed the share price.
In May and June; we saw the February highs between $185 and $190 acting as resistance. Again; Microsoft failed at this level a few times before ultimately breaking out over it and running past $200.
On a bigger pullback, I would love to see Microsoft back at $185 and have it find support near this level. When prior resistance acts as support, it’s a bullish sign for investors.
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