Microsoft Corp. on Thursday updated its Q4 and FY23 guidance due to recent unfavorable currency headwinds.
Microsoft cited an incremental $460 million headwind from FX to its total revenue guidance issued in late April, representing slightly less than a 100bps delta on total revenue.
Microsoft now expects revenue of $51.94 billion–$52.74 billion in Q4 (down ~1 percent from $52.4 billion–$53.2 billion), and EPS of $2.24–$2.32 (down ~$0.03 from $2.28-$2.35).
Microsoft generates ~50 percent of its revenues from international markets.
Mizuho analyst Gregg Moskowitz reiterated a Buy on Microsoft with a price target of $350.
Moskowitz believed that MSFT’s fundamentals remain intact and remained confident of its growth opportunities over the medium-term and beyond with higher success in the cloud.
Rosenblatt analyst Blair Abernethy reiterated a Buy with a price target of $349.
Abernethy’s recent enterprise software data points and customer conversations reflect continuing strength in Digital Transformation and cloud migration trends leading to his belief of tiny end-market demand slowdown for Microsoft since it reported Q3.
He watched for potential selling cycle disruptions in Europe and hardware supply chain impacts from Covid-related shutdowns in China.
Abernethy adjusted his Q4 estimates and FY23 and FY24 forecast to account for the FX headwinds.
With the weakness in the stock in recent weeks, he expected Microsoft to remain active on its share buyback program in Q4.
