September’s consumer price index report showed an 8.2% year-over-year increase in inflation, beating market estimates. This has aggravated concerns among investors and businesses about the possibility of a fourth consecutive 75-bps interest rate hike next month.
Legendary investor Mark Mobius foresees “interest rates in America going to 9% simply because if inflation is 8%, the playbook says you've got to raise rates higher than inflation." The Fed’s unrelenting hawkish stance has raised the odds of the economy sliding into a recession and kept the market on edge. The CBOE Volatility Index has climbed more than 82% year-to-date.
Amid the volatile market backdrop, Microsoft Corporation (MSFT) and Biogen Inc. (BIIB) have been trending because of their inherent stability. Therefore, if you haven’t already invested in these stocks, delaying further may not be wise.
Microsoft Corporation (MSFT)
MSFT, the ubiquitous software behemoth, needs no introduction. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On September 20, 2022, MSFT declared a quarterly dividend of $0.68 per share, reflecting a 10% sequential increase. The dividend is payable on December 8, 2022. MSFT pays a $2.72 dividend annually, representing a yield of 1.19% at the current price. The 4-year average dividend yield is 1.07%, and the company’s dividends have grown for 17 consecutive years.
On September 6, MSFT emerged as one of the frontrunners for the acquisition of Aurora Innovation, Inc. (AUR), a self-driving tech company. Materialization of this acquisition would augment MSFT’s automation portfolio and is expected to strengthen its financial performance in the long run.
For the fourth quarter of the fiscal year 2022 ended June 30, MSFT’s total revenue increased 12.4% year-over-year to $51.87 billion, while its operating income grew 8% from the year-ago value to $20.50 billion. During the same period, the company’s net income increased 2% year-over-year to $16.74 billion, while its EPS came in at $2.23, up 2.8% year-over-year.
For the fiscal year ending June 2023, analysts expect MSFT’s revenue to come in at $219.28 billion, representing an increase of 10.6% year-over-year, while its EPS is expected to increase 9.7% year-over-year to $10.10. The company has surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
MSFT’s shares have dipped 2.6% over the past month to close the last trading session at $236.15.
MSFT’s POWR Ratings reflect its promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
Also, the stock has grade B for Stability and Quality. Within the Software – Business industry, it is ranked #10 out of 52 stocks. Click here for MSFT’s additional POWR Ratings for Growth, Value, Sentiment, and Momentum.
Biogen Inc. (BIIB)
BIIB develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. The company has a leading portfolio of medicines to treat multiple sclerosis, has introduced the first approved treatment for spinal muscular atrophy, and developed the first and only approved treatment to address a defining pathology of Alzheimer’s disease.
On October 17, BIIB announced that the U.S. Food and Drug Administration (FDA) extended the review period of the new drug application (NDA) for tofersen by three months. This follows responses submitted by BIIB to information requests by the FDA, which the FDA considered a Major Amendment to the application that will require additional time for review.
On the same day, BIIB and Sage Therapeutics, Inc. (SAGE) presented additional data from the Phase 3 SKYLARK Study of zuranolone in adult women with postpartum depression (PPD), at the 35th European College of Neuropsychopharmacology (ECNP) Congress. The company has found the results of the study satisfactory.
During the fiscal second quarter ended June 30, 2022, BIIB’s total revenue came in at $2.59 billion, registering a slight year-over-year decline due in part to generic and biosimilar competition for TECFIDERA and RITUXAN. The total cost and expenses declined 39.8% year-over-year to $1.32 billion.
BIIB’s net income increased 135.9% from the year-ago value to $1.06 billion, while its EPS grew 142.1% from the prior-year quarter to $7.24.
Analysts expect BIIB’s EPS for the fourth quarter of the current fiscal year (ending December 2022) to increase 3.2% year-over-year to $3.50. The company has surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 28.4% over the past month to close the last trading session at $262.65.
It is no surprise that BIIB has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. The stock also has grade A for Value, Sentiment, and Quality.
BIIB is ranked #2 among 384 stocks in the Biotech industry. To see additional POWR Ratings for Growth, Momentum, and Stability for BIIB, click here.
MSFT shares were trading at $235.21 per share on Friday morning, down $0.94 (-0.40%). Year-to-date, MSFT has declined -29.61%, versus a -22.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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