Microsoft: Forget About Days of Clear Beat/Raises, Citi Warns Amid FX/Macro Headwinds

Citi analyst Tyler Radke slashed the price target on Microsoft (NASDAQ: MSFT) to $330 per share from $364 heading into the FQ4 print.

The analyst warned investors that “the days of clear-cut beat/raises for MSFT may soon be a distant memory.” Still, he reiterated a Buy rating into the earnings.

“On one hand, our checks and survey work suggest a robust demand environment, particularly in Azure/Commercial cloud and O365. Offsetting the strength in MSFT’s marquee franchises are significant incremental FX pressure and weakening PC demand,” Radke wrote in a client note.

Overall, the analyst expects to see “solid” results and reiterated full-year guidance. Still, a strong rally in the U.S. dollar and weakening PC demand forced him to cut estimates by c4%. Given these changes, Citi now sits below the Street on FY23 estimates.

“We continue to be buyers 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,” Radke concluded.

By Senad Karaahmetovic

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