Earnings Preview: What To Expect From Microsoft Today

• Microsoft releases earnings later the close on Tuesday.
• Recent news from cloud industry hiring reads every bit bearish for the sector.
• Our deep swoop on Microsoft has a 12-month cost target of $230.

Microsoft (MSFT) releases earnings after the close on Tuesday in what is shaping up to be a make-or-break week for the stock market.

Microsoft earnings

Microsoft is expected to mail earnings per share (EPS) of $two.29 and acquirement of $52.4 billion. This compares with the previous quarter'southward EPS of $ii.22 and revenue of $49.36 billion. As ever the focus will be on forward guidance and in particular concerns over the rising dollar. In May Microsoft said information technology was slowing hiring, and in early June the firm warned about the impact of the strong dollar on its quarterly earnings. The hiring freeze is existence felt by many in the tech industry every bit concerns abound over rising involvement rates. Last week Bloomberg reported that the Microsoft Azure cloud segment has cut many chore openings, which is significant. Azure is the commuter of recent profitability and accounts for virtually forty% of Microsoft'south revenue at the moment.

See our contempo assay: Microsoft Stock Deep Dive: Price target at $230 with near-term risks due to strong U.s.a. dollar (fxstreet.com)

Microsoft price target

Wall Street remains highly optimistic about Microsoft with an boilerplate price target of $347.61. Nosotros await multiple downgrades postal service-earnings. Given that the bar has already been lowered past Microsoft, nosotros expect earnings to exist in line or perhaps characteristic a pocket-sized vanquish. Outlook volition be bearish notwithstanding, which will drive share toll movement.

Microsoft stock forecast

When Microsoft warned of the effects of the strong dollar in early June, the dollar index was trading at 102. At present it is at 106 but reached 109 in mid-July. This effect is but getting worse for Microsoft. Despite this warning, MSFT shares did not move essentially. Nosotros expect the company to lower guidance for the remainder of the yr based on the potent dollar but also based on slowing growth in its cloud business concern. This has been a primal growth driver for Microsoft over the past few years, but commentary from others in the deject infinite has been decidedly bearish. Microsoft shares are unchanged since that early June alarm. That warning is likely to be paid frontward and so sets the stock up for some other bearish tilt at $240. Selling volatility is our favored play ahead of earnings every bit volatility is always marked up in advance of earnings. This is a loftier-risk strategy for highly experienced traders just.

MSFT weekly chart

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Source: https://www.fxstreet.com/news/microsoft-msft-earnings-preview-more-disappointment-likely-as-strong-dollar-and-slowdowns-hit-forecasts-202207251135

Posted by: perrylitsee.blogspot.com

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