- Microsoft Corp MSFT updated its Q4 and FY23 guidance due to recent unfavorable currency headwinds.
- Microsoft cited an incremental $460 million headwind from FX to its total revenue guidance issued in late April, representing slightly less than a 100bps delta on total revenue.
- Microsoft now expects revenue of $51.94 billion - $52.74 billion in Q4 (down ~1% from $52.4 billion - $53.2 billion), and EPS of $2.24-$2.32 (down ~$0.03 from $2.28-$2.35).
- Microsoft generates ~50% of its revenues from international markets.
- Mizuho analyst Gregg Moskowitz reiterated a Buy on Microsoft with a price target of $350.
- Moskowitz believed that MSFT's fundamentals remain intact and remained confident of its growth opportunities over the medium-term and beyond with higher success in the cloud.
- Rosenblatt analyst Blair Abernethy reiterated a Buy with a price target of $349.
- Abernethy's recent enterprise software data points and customer conversations reflect continuing strength in Digital Transformation and cloud migration trends leading to his belief of tiny end-market demand slowdown for Microsoft since it reported Q3.
- He watched for potential selling cycle disruptions in Europe and hardware supply chain impacts from Covid-related shutdowns in China.
- Abernethy adjusted his Q4 estimates and FY23 and FY24 forecast to account for the FX headwinds.
- With the weakness in the stock in recent weeks, he expected Microsoft to remain active on its share buyback program in Q4.
- Price Action: MSFT shares traded lower by 1.86% at $269.47 on the last check Friday.
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