Microsoft Corporation (NASDAQ: MSFT) has confirmed that it will release its fiscal Q1 2022 financial results on October 26, 2021, after market close.
What to look for
Microsoft's movement of its model from license-based to recurring revenue model has been successful in growth with the transformation experienced in all business segments. The Intelligent Cloud has been the most significant component of the shift with the change to Office to subscription-based Office 365 changing the "Productivity and Business Processes" division's nature not to rely on step-change functionality.
Earnings: Stockearning’s Estimated EPS is expected better Q4 2021's $2.17 per share, topping earnings per share estimates of $1.9. Historical EPS Performance for the past 12 quarters shows that the company has topped estimates in all quarters (100%). In Q1 2021, the company reported EPS of $1.82 per share relative to an EPS estimate of $1.53 per share.
Revenue: In Q4 2021, the company reported revenues of $46.2 billion, topping analyst estimates of $44.1 billion. The company’s revenue grew 21% compared to the same quarter the previous year. Net income was up by 47% YoY to 16.5 billion. Azure reported 51% revenue growth during the quarter compared to a year ago.
Stock movement: Since the last earnings release, Microsoft stock has gained 3.4%. Following previous earnings releases, the share price was UP 28 times over the last 46 quarters. So, the Historical price reaction predicts a 60% probability of share price going down after Microsoft releases its Q1 2022 earnings. According to the Stockearning algorithm, the predicted first-day move is 3%, and the predicted move on the seventh day is 4%.
What analysts are saying
Tigress Financial analysts Ivan Feinseth raised Microsoft's target price to $366 from $303 and maintained a "Buy" rating on the shares. The analyst expects a strong performance from the cloud-based services segment, which will drive record results in the third quarter. In addition, Feinseth cited Microsoft’s recent 11% quarterly dividend increase and the latest $60 billion stock repurchase approval for the higher price target.
Also, Barclays analyst Raimo Lenschow raised his target price on Microsoft from $330 to $340 n and maintained a “Buy” rating on the stock. In a research note, Lenschow said that investors will move to 2023 as the new valuations base year in the coming months. The analyst said that the move is vital for software with high growth rates as valuations tend to see a considerable step-down.
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