Microsoft (NASDAQ:MSFT) recently released its fiscal second-quarter results, exceeding expectations with earnings of $2.93 per share, a 6% beat over the Consensus, and sales reaching $62.02 billion, surpassing estimates by over 1%.
Despite the stock’s relatively stagnant performance following its Q2 success, analysts remain bullish on Microsoft’s prospects.
Growth & Recent Performance
Amidst the flurry of earnings reports from tech giants like Amazon, Apple, and Meta Platforms, Microsoft’s robust Q2 performance might have been overlooked. However, the company demonstrated significant growth, with earnings increasing by 26% year over year and quarterly sales climbing by 17%. The growth was primarily driven by Microsoft’s cloud services. Looking ahead, annual earnings are forecasted to rise by 18% in fiscal 2024 to $11.60 per share, with total sales expected to increase by 15% to $243.38 billion.
Despite a notable 54% increase in its stock price over the last year, the anticipation of continued double-digit earnings per share (EPS) and sales growth in fiscal year 2025 keeps investor interest high.
Earnings Estimate Revisions & Broker Recommendations
Recent developments further strengthen the case for investing in Microsoft. Earnings estimates for fiscal years 2024 and 2025 have seen positive revisions over the last 30 days, with a 3% increase in the past week.
With an average broker rating (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), Microsoft receives strong endorsement from analysts. Out of the 37 brokers covering Microsoft’s stock, 33 rate it as a Strong Buy, three as a Buy, and only one as a Hold.
Bottom Line
There seems to be more potential for growth in Microsoft’s stock, with an average price target of $438.97 per share suggesting an 8% upside.
Investors may find Microsoft an attractive investment opportunity given its strong performance, growth prospects, and favorable analyst sentiment. However, as with any investment decision, it’s essential to conduct thorough research and consider individual financial goals and risk tolerance.
Featured Image: Unsplash
