Bernstein Analyst Raises Microsoft (MSFT) Price Target by 5.2% After Strong Q3 Performance

Bernstein's Mark Moerdler raised their price target on Microsoft (NASDAQ: MSFT) by 5.2% from $465 to $489 on 2024/04/26. The analyst maintained their Buy rating on the stock.

In an assessment of Microsoft's Q3 2024 earnings report, Moerdler highlighted the company's strong performance, surpassing all key metrics, including Azure growth. The analyst noted that management provided encouraging guidance for Q4 and emphasized the company's success in the field of artificial intelligence.

For Q3 2024, Microsoft reported impressive results: - EPS of $2.94, exceeding the Zacks Consensus Estimate by 4.63% and showing a 20% increase compared to Q3 2023's $2.45. - Revenue of $61.86B, surpassing the Zacks Consensus Estimate by 2% and reflecting a 17% growth compared to Q3 2023's $52.86B. - Productivity & Business Processes segment revenue of $19.6B, up 12% year-over-year. - Intelligent Cloud segment revenue of $26.7B, up 21% year-over-year. - More Personal Computing segment revenue of $15.6B, up 17% year-over-year. - Operating income of $27.6B, up 23% year-over-year.

Looking ahead, management provided guidance for Q4 2024, expecting continued growth: - Productivity & Business Processes segment revenue of $19.9B to $20.2B. - Intelligent Cloud segment revenue of $28.4B to $28.7B. - More Personal Computing segment revenue of $15.2B to $15.6B.

Furthermore, management expressed optimism for the company's performance in FY 2025, anticipating double-digit revenue growth and double-digit operating income growth.

Chairman & CEO Satya Nadella highlighted the company's focus on AI transformation, stating, “Microsoft Copilot and the Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry.” Executive VP & CFO Amy Hood also emphasized the strong performance of Microsoft's cloud division, stating, “This quarter, Microsoft Cloud revenue was $35.1B, up 23% year-over-year, driven by strong execution by our sales teams and partners.”

The positive earnings report and guidance prompted several other analysts to update their ratings and price targets on Microsoft.

Goldman Sachs's Kash Rangan raised their price target by 14.4%, from $450 to $515, and maintained their Strong Buy rating on the stock. JP Morgan's Mark Murphy also raised their price target, increasing it by 6.8% from $440 to $470, while maintaining their Strong Buy rating on the stock. Piper Sandler's Brent A. Bracelin raised their price target by 2.2%, from $455 to $465, and reiterated their Strong Buy rating on the stock.

These updated ratings reflect the overall sentiment among analysts, with 100% of top-rated analysts currently rating MSFT as a Strong Buy or Buy. No analysts see it as a Hold, and none recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that MSFT will deliver earnings per share (EPS) of $12.67 in the upcoming year. If the analysts' predictions hold true, this would represent a 9.3% increase on a year-over-year basis.

Investors have responded positively to Microsoft's strong performance, with the stock price rising 1.8% since the latest quarterly report on 2024/04/25. Year-over-year, the stock has seen an impressive increase of 37.6%. During this period, Microsoft has outperformed the S&P 500, which has shown a growth of 25.7%.

Bernstein analyst Mark Moerdler, who issued the updated rating and price target, is ranked in the top 22% of Wall Street analysts by WallStreetZen. With an average return of 20% and a 66.7% win rate, Moerdler specializes in the Industrials and Technology sectors.

Microsoft Corporation, a global leader in software, services, devices, and solutions, operates in three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The company's diverse product offerings include popular software such as Office, Exchange, SharePoint, Microsoft Teams, and Skype, as well as cloud platforms like Azure. Microsoft also manufactures devices such as Surface, PCs, tablets, and gaming consoles. Headquartered in Redmond, Washington, Microsoft continues to innovate and drive growth across various industries.

As always, investors should conduct their own research and consider multiple sources of information before making any investment decisions.

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