On Monday, CFRA, a leading financial research firm, updated its outlook on Microsoft Corporation (NASDAQ:MSFT), increasing the 12-month price target from $455.00 to $475.00. The firm maintained its Strong Sell rating on the tech giant's shares. The revision reflects CFRA's expectations of an improved artificial intelligence (AI) growth trajectory and high visibility for the company.
The analyst at CFRA has adjusted the earnings per share (EPS) estimates for Microsoft, citing an optimistic view of the company's future performance. For the fiscal year ending June 2024, the EPS estimate has been raised to $11.74, up from the previous $11.56. For fiscal year 2025, the forecast is now $13.43, increased from $13.04, and the initial estimate for fiscal year 2026 stands at $15.39.
As investors anticipate Microsoft's March-quarter results expected on April 23, 2024, CFRA projects an EPS of $2.84 on the back of a 15% revenue growth. The firm's focus is particularly on the performance of Azure, Microsoft's cloud computing service, which is predicted to grow by 29%. AI is expected to contribute 6 to 8 percentage points to this growth.
The adoption of Microsoft 365 Copilot, especially in its first full quarter, is also under scrutiny. CFRA expects to observe positive commentary and a beneficial impact on the Average Revenue Per User (ARPU) within Microsoft's Office Commercial business.
In the Personal Computing segment, a growth of 14% is anticipated, supported by the positive influence of Activision on the segment's revenue. Despite high expenditure, CFRA suggests that Microsoft will experience margin expansion through fiscal year 2026, benefiting from operating efficiencies and scale advantages derived from cloud and AI investments.
InvestingPro Insights
Microsoft Corporation's (NASDAQ:MSFT) recent performance has caught the attention of investors and analysts alike, with CFRA increasing its 12-month price target. To complement this analysis, InvestingPro data provides a deeper dive into the company's financial health and market position. With a robust market capitalization of $3.16 trillion and a high P/E ratio of 37.93, Microsoft demonstrates significant investor confidence in its future earnings potential. The company's revenue growth in the last twelve months as of Q2 2024 stands at 11.51%, reflecting a strong trajectory that aligns with CFRA's positive outlook.
InvestingPro Tips underscore Microsoft's stability and growth, noting that the company has raised its dividend for 22 consecutive years, showcasing its commitment to returning value to shareholders. Additionally, Microsoft is trading near its 52-week high, indicating a sustained positive sentiment in the market. For readers looking to delve further into Microsoft's financials and market performance, InvestingPro offers 17 additional tips on their platform, accessible at https://www.investing.com/pro/MSFT. To enhance your investing toolkit, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.