Microsoft Corporation MSFT is set to print its first-quarter 2024 fiscal year financial results after the market closes on Tuesday. The stock was trading flat heading into the event.
When the tech giant printed its fiscal fourth-quarter results on July 25, the stock closed 3.76% lower the following day and subsequently entered a downtrend.
For that quarter, Microsoft reported an EPS of $2.69 on revenue of $56.2 billion. Both numbers beat the consensus analyst estimates of $2.55 and $55.47 billion, respectively.
For the first quarter, analysts estimate Microsoft will print earnings per share of $2.50 on revenues of $51.4 billion.
Ahead of the print, Citigroup analyst Tyler Radke maintained a Buy rating and raised the price target from $420 to $430... Read More...
From a technical analysis perspective, Microsoft’s stock looks bullish heading into the event, trading in a falling channel pattern. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.
Options traders, particularly those who are holding close-dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.
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The Microsoft Chart: Microsoft began trading in a falling channel pattern on Oct. 16 and on Monday the stock negated its uptrend by forming a lower low. The falling channel formation is bearish for the short term, but when a stock breaks up from the upper descending trend line of the pattern on higher-than-average volume, it indicates a longer-term reversal could be on the horizon.
- When Microsoft formed its lower low, the stock printed an inverted hammer candlestick above the 50-day simple moving average and bounced up from that area. On Tuesday, Microsoft attempted to break up from the falling channel pattern but rejected the upper trend line.
- If the stock receives a bullish reaction to its earnings print and breaks up from the channel to form a higher high above the Oct. 19 high of $336.88, the stock could be headed back toward its all-time high of $366.78. If Microsoft suffers a bearish reaction to the print, the 200-day SMA is likely to act as support at least temporarily, but if the stock falls under that level, a lower gap between $281.60 and $292.73 is likely to be filled.
- Microsoft has resistance above at $338.72 and at $349.67 and support below at $323.41 and at $316.
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