Microsoft Corp (MSFT)

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Earnings Preview: Microsoft Corp. (NASDAQ: MSFT)
By: 24/7 Wall St. | July 24, 2023

• Here is a look at three companies set to report quarterly results after markets close Tuesday afternoon.

Microsoft

Over the past 12 months, Microsoft Corp. (NASDAQ: MSFT) has added 29.8% to its share price, including a gain of 43.4% so far in 2023. And while shares got a boost with the March launch of OpenAI’s ChatGPT, the share price increase has followed a trend line that began in January.

The recent pricing announcement for Microsoft’s CoPilot AI software gave the shares another jolt, but all the hype about AI is not expected to add much to either the top or bottom line. Microsoft’s fortunes remain tethered to Azure. That is unlikely to change in the second half of the calendar year (the first half of the company’s 2024 fiscal year).

Sentiment for Microsoft stock is virtually all positive. Of 51 analysts covering it, 43 have a Buy or Strong Buy rating, and seven more rate it at Hold. At a share price of around $344, the potential upside based on a median price target of $385 is about 11.9%. At the high target of $450, the implied gain is 30.8%.

For its fourth quarter of fiscal 2023, revenue at the Dow Jones industrial average component is forecast at $55.48 billion, up 5% sequentially and by 7.0% year over year. Adjusted EPS are forecast at $2.55, up 4% sequentially and 14.3% higher year over year. For the full fiscal year that ended in June, consensus estimates call for EPS of $9.63, up 4.6%, on revenue of $11.2 billion, up 6.5%.

Microsoft stock trades at 35.7 times expected 2023 EPS, 31.2 times estimated 2024 earnings of $11.02 and 27.2 times estimated 2025 earnings of $12.62 per share. The 52-week range is $213.43 to $366.78. Microsoft pays an annual dividend of $2.72 (yield of 0.78%). Total shareholder return over the past year was 31.06%.

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