"Without a clear mobile strategy, Microsoft again risks falling behind nimbler competitors," analyst Joseph Bonner wrote in a note.
Argus reiterated its Hold rating on Microsoft following its fourth-quarter results, which showed that the company is seeing strong growth in its cloud and commercial services businesses.
Recent Performance
Microsoft's fourth-quarter earnings beat the consensus EPS estimate by $0.11. Adjusted revenue rose 2 percent to $22.64 billion, driven by Microsoft Azure, cloud services products, and Office commercial and consumer products.
"Currency translation remained a significant drag on Microsoft's results in the June quarter; however, management expects these headwinds to diminish to about 1 percent in 1H17 and to zero in 2H17 if rates remain stable," Bonner said.
Expectations And Estimates
For the first quarter, Microsoft projects revenue of $21.55 billion at the midpoint of its guidance range, in line with the prior year. The analyst raised his FY17 EPS forecast to $2.92 from $2.85 and set a FY18 EPS target of $3.11.
Microsoft pays a quarterly dividend of $0.36, or $1.44 annually, for a yield of about 2.7 percent. Argus cut its FY17 dividend estimate to $1.44.
Microsoft bought back $16 billion of its stock in FY16, and the share count declined 1.6 percent year-over-year in the fourth quarter.
The analyst expects continued robust share repurchases from Microsoft.
According to Bonner, with a trailing enterprise value/EBITDA multiple of 14.2, Microsoft trades above the peer median of 11.4 and above the high end of its five-year historical range of 8.3-10.3. Microsoft's forward enterprise value/EBITDA multiple of 10.7 is 26 percent below the peer average, less than the average discount of 38 percent over the past two years.
Microsoft shares are up 2 percent year-to-date versus 5.5 percent increase for the S&P 500. They were seen up 1.24 percent to $56.49 at time of writing.
Full ratings data available on Benzinga Pro.
Did you like this article? Could it have been improved? Please email feedback@benzinga.com with the story link to let us know!
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Date | ticker | name | Actual EPS | EPS Surprise | Actual Rev | Rev Surprise |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.