Microsoft could hit a new record with strong Q4 revenue; Target price $308

The Redmond, Washington-based global technology giant, Microsoft, is expected to release its fiscal fourth quarter earnings of $1.91 per share, representing a year-over-year growth of more than 30%, compared to $1.46 per share in the same quarter a year ago.

The world’s largest software maker is set to achieve revenue growth of more than 15% to approximately $44.1 billion, up from $38.03 billion a year earlier. In the last four consecutive quarters, the company has delivered an average earnings surprise of more than 15%.

Microsoft’s Better-than-expected results, to be announced on Tuesday, July 27, should help the stock reach new all-time highs. Microsoft stocks are up more than 30% so far this year.

Comments from analysts

“Channel work and our CIO survey point to building momentum across the cloud, hybrid and on-premises portfolio, which should deliver a solid Q4. As investors look for reassurance in margin expansion in FY22, our model suggests sustained EPS growth and stock gains into the teens,” said Keith Weiss, an equity analyst at Morgan Stanley.

“Strong positioning for public cloud adoption, major distribution channels and installed customer base, and improved margins support a path well beyond the $1T mkt cap. Sustained double-digit NT rev growth is supported by Azure (gaining in the public cloud), datacenter (equity gains and positive price trends), O365 (base growth and ARPU rise), and LinkedIn. GM% improvement, continued opex discipline and strong return on capital lead to sustainable total return profile for teens. At ~29x CY22e GAAP EPS, Microsoft (MSFT) trades at a premium to the S&P, guaranteed by: MSFTs premium return profile. Multiple expansions are likely to result from gaining comfort in the sustainability of commercial companies’ gross profit dollars.”

Microsoft stock price forecast

Twenty-five analysts who gave stock ratings for Microsoft over the past three months, the 12-month average price forecast of $308.65 with a high forecast of $378.00 and a low forecast of $270.00.

The average price target represents a 6.78% change from the last price of $289.05. All those 25 analysts rated “Buy,” none rated “Hold” or “Sell,” according to Tipranks.

Morgan Stanley gave the stock price forecast of $300 with a high of $380 in a bull scenario and $195 in the worst case scenario. The company issued an Overweight rating to the global tech giant’s stock.

Several other analysts have also updated their stock outlook. Microsoft had its target price raised by Barclays to $325 from $288. The brokerage currently has an overweight rating on the software giant’s stock. Citigroup again issued a buy recommendation and a price target of $378.00. Jefferies Financial Group raised its price target from $290 to $310 and advised the company to buy.

Microsoft’s (MSFT) a significant outperformer YTD, up 30% from the software index by 15% (IGV), raising the bar slightly for MSFT shares go to the F4Q printout. F4Q expectations are achievable, supported by MSFTs diverse portfolio including Azure and Teams driving sales. Key points to keep an eye on are margin pressure in FY22, heightened expectations and more color on recent mergers and acquisitions and broader ambitions. Hold the buy, raise the PT to $335,” said Brent Thill, stock analyst at Jefferies.

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