BMO Analyst: Microsoft’s Profit Growth is Unsustainable

Microsoft has recently attracted plaudits for personal computing devices including the Surface Pro 4 and the Surface Book. However, analyst Keith Bachman of BMO Capital Markets has expressed his firm’s concern that Microsoft’s huge reliance on such products makes its profit growth unlikely to last.

In a note quoted from by Benzinga, Bachman also cast doubt on future returns from Microsoft’s recent move to acquire professional social networking site LinkedIn. He has projected a 1% fall in operating profit in the 2017 fiscal year, but growth in this area in the 2018 fiscal year.

Bachman insisted: “For the stock to move meaningfully higher, we believe that operating profit needs to grow”. Nonetheless, he retained his Outperform rating and $57 target price for Microsoft, and acknowledged that the Redmond corporation is positioned for a positive long term future.

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