Microsoft Analyst Fear FX, PC Headwinds Eating Into Its Q1 Again

Citigroup analyst Tyler Radke maintained Microsoft Corp MSFT with a Buy and lowered the price target from $300 to $282.
Currency and PC headwinds will likely impact MSFT’s Q1 results and may drive reported results below consensus again.
However, his reseller survey and partner checks gave him confidence that Enterprise demand for MSFT is holding up well, with record partner quota, accelerator achievement levels, and incremental signs of Azure demand strength.
He expects MSFT to show more resilient growth trends versus peers, given their broad portfolio and sticky enterprise install base.
Radke's revenue estimates decrease ~2.5pts for FY23, driven mainly by FX and weaker PCs with a more modest profit cut.
With currency headwinds worsening by another ~2pts, he expects the reiteration of double-digit revenue and operating income growth for FY23 will come on a cc basis, not a reported basis.
Radke re-rated with MSFT off ~30%YTD and a lucrative combination of compelling relative valuation, business model resiliency, excessive revenue+profitability growth versus S&P500.
Cowen & Co analyst Derrick Wood maintained Microsoft with an Outperform and lowered the price target from $320 to $310.
Wood thinks an in-line Azure print and Q2 guidance should give investors comfort in core growth trends.
Price Action: MSFT shares traded lower by 1.16% at $234.73 on the last check Wednesday.

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