Citi Cuts Microsoft's Price Target By 9.3% - Read Why

  • Citigroup analyst Tyler Radke maintained Microsoft Corp MSFT with a Buy and cut the price target from $364 to $330 (30% upside).
  • The days of clear-cut beats or raises for MSFT may soon be a distant memory, but Radke maintained a Buy rating in FQ4 results. 
  • On the one hand, Radke's checks and survey work suggest a robust demand environment, particularly in Azure/Commercial cloud and O365. 
  • Offsetting the strength in MSFT's marquee franchises were significant incremental FX pressure and weakening PC demand. 
  • While he expects solid results and a reiteration of double-digit cc revenue and operating income growth for FY23, he cut the estimates by ~4% to reflect FX/PC headwinds and modestly slower growth in other key businesses, given moderating IT spending into 2H of this year. 
  • His FY23 estimates were below the street but likely in line with buy-side expectations. 
  • He continues to be the buyer of shares with the stock off ~24% YTD and a lucrative combination of compelling relative valuation, business model resiliency, and outsized revenue growth vs. S&P500 companies. 
  • Price Action: MSFT shares traded higher by 0.38% at $255.22 on the last check Tuesday.
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