Shares of Microsoft Corporation (NASDAQ:MSFT) recently broke out to a fresh 52-week and all-time high of $61.37 following a better-than-expected earnings report. On Oct. 20, the company reported earnings of $0.76 a share on revenue of $22.3 billion. Wall Street was looking for a profit of $0.68 a share on revenue of $21.7 billion.
It was the second-straight earnings blowout for Microsoft, as the $0.08 beat followed an $0.11 beat when the company reported in July. The surge from $57.25 ahead of the news propelled shares past $60 afterwards. Microsoft’s previous all-time high tapped $59.56 in 1999, which was at the peak of the dot-com bubble.
Analysts were quick to upgrade the stock and their price targets following the solid quarter, but few, if any, were pounding the table to buy the stock ahead of earnings. There were no upgrades for MSFT during October, with the Wall Street Journal saying that the company should report “decent” results.
Barclays PLC (ADR) (NYSE:BCS) raised its price target from $60 to $65, while Deutsche Bank AG (USA) (NYSE:DB) upped its price target from $65 to $70. William Blair upgraded shares to “Outperform” from “Market Perform,” while Wunderlich upgraded the stock to a “Buy” with a $70 price target. One brokerage firm that boycotted the next-day parade was Jefferies, which said shares were “grossly overvalued.”
I’m not sure if I agree with the latter of the aforementioned comments, but I do believe shares are “fairly valued” at current levels, so I’m currently targeting December put options for a breakdown if support is breached.
Buy to open the MSFT December 57.50 puts (MSFT161216P00057500) for a maximum price of $1.00.