Here's Why UBS Is Cautious On Microsoft, Alibaba

UBS painted a cautious picture of Microsoft Corp MSFT and Alibaba Group Holding Ltd BABA.
UBS analyst Karl Keirstead kept a Buy rating on Microsoft after speaking with several industry checks and Microsoft IR.
Keirstead saw the Office 365 juggernaut as likely to begin to decelerate given high penetration and the pandemic/work-from-home benefit starting to fade.
Also Read: Here's How Alibaba Scooped Bullish Rating Amid Surging COVID Cases, Regulatory Crackdown
Shares of companies in the broader technology sector traded lower amid a rise in U.S. Treasury yields and also in anticipation of expected Fed rate hikes.
UBS analyst Jerry Liu lowered the price target on Alibaba to $140 from $150 (37% upside) but kept a Buy.
Liu slashed his Q4 estimates to reflect the incremental Covid-19 related headwinds and the regulatory and macro impacts last year. Still, he expects the company to cut costs this year, focusing on efficiency improvements in its domestic lower-tier city, community group buying, and on-demand delivery initiatives.
Any positive outcome on ADR listing negotiations between regulators and shifting Alibaba's Hong Kong listing to a primary one could be additional catalysts.
Price Action: MSFT shares closed lower by 3.94% at $285.50 on the last check Monday.

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