Just over a week ago, Microsoft (MSFT) published its fiscal second quarter results, reporting Q2 earnings of $2.93 a share, surpassing the Zacks Consensus by 6%. The sales of $62.02 billion also exceeded estimates by over 1%.
While Microsoft’s stock performance has been relatively subdued since beating its Q2 top and bottom-line expectations, brokers remain optimistic about the software giant’s outlook.
Growth & Recent Performance
Amid the flurry of quarterly results from its peers such as Amazon (AMZN), Apple (AAPL), and Meta Platforms (META), Microsoft’s Q2 earnings surged 26% year over year, with quarterly sales rising 17%. The company’s expansion has been primarily driven by its cloud services, leading to a forecast of an 18% rise in annual earnings to $11.60 per share in fiscal 2024, alongside an estimated 15% increase in total sales, reaching $243.38 billion.
Microsoft’s stock has soared by 54% over the past year, with expectations of double-digit EPS and sales growth in FY25 keeping investors intrigued.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Earnings Estimate Revisions & Broker Recommendations
Further strengthening the case to buy Microsoft’s stock, earnings estimates for FY24 and FY25 have risen by 3% and showed an upward trend over the past 30 days.
Microsoft currently holds an average broker rating (ABR) of 1.14. Out of the 37 brokers covering Microsoft’s stock and providing data to Zacks, 33 have strong buy ratings, three have buy ratings, and only one has a hold rating.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Bottom Line
The Average Zacks Price Target of $438.97 per share indicates an 8% upside for Microsoft’s stock. Moreover, the stock currently holds a Zacks Rank #2 (Buy), reflective of the positive earnings estimate revisions following the favorable Q2 results.
Time to buy? The numbers seem to suggest so.
