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Time to Buy Microsoft's (MSFT) Stock for More Upside
It’s been just over a week since Microsoft (MSFT - Free Report) reported its fiscal second quarter results with Q2 earnings of $2.93 a share topping the Zacks Consensus by 6% and sales of $62.02 billion beating estimates by over 1%.
Although Microsoft’s stock performance has been virtually flat since eclipsing its Q2 top and bottom-line expectations brokers are high on the software giant's outlook.
Growth & Recent Performance
It may have been easier to miss Microsoft’s Q2 report with many of its Magnificent Seven peers reporting their quarterly results last week as well including the likes of Amazon (AMZN - Free Report) ), Apple (AAPL - Free Report) ), and Meta Platforms (META - Free Report) ).
With that being said, Microsoft’s Q2 earnings did jump 26% year over year with quarterly sales rising 17%. Microsoft’s growth has been fueled by its cloud services and annual earnings are now projected to rise 18% in fiscal 2024 to $11.60 per share with total sales forecasted to climb 15% to $243.38 billion.
Image Source: Zacks Investment Research
Microsoft’s stock is still up +54% over the last year and anticipation of double-digit EPS and sales growth in FY25 as well should keep investors engaged.
Image Source: Zacks Investment Research
Earnings Estimate Revisions & Broker Recommendations
Making a stronger case for buying Microsoft’s stock is that earning estimates for FY24 and FY25 are nicely up over the last 30 days and have risen 3% in the last week respectively.
Image Source: Zacks Investment Research
Microsoft currently has an average broker rating (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell). To that point, 33 out of the 37 brokers covering Microsoft's stock and providing data to Zacks have strong buy ratings with three having buy ratings and only one at a hold.
Image Source: Zacks Investment Research
Bottom Line
There does appear to be more room to run for Microsoft’s stock with the Average Zacks Price Target of $438.97 a share suggesting 8% upside. Notably, Microsoft’s stock currently sports a Zacks Rank #2 (Buy) in correlation with the trend of positive earnings estimate revisions following the company’s favorable Q2 results.