Microsoft: Looking Past Share Volatility After Q2 FY23 Results
(Preview) Company Update (MSFT US) (Buy)
Summary
Microsoft's Q2 FY23 results overnight divided market opinion, sending the share price gyrating between up 5% and down 4% so far.
The headlines were mixed because of some one-offs, but the two more important segments still grew double-digits on an underlying basis.
Year-on-year growth is decelerating, but we see this as merely a cyclical bump and management is cutting costs decisively.
We believe Adjusted EBIT will be flattish for FY23 and double-digit growth will resume after. Stock is cheap at 26x CY22 EPS.
With shares at $239.66, we expect a total return of 89% (20.7% annualized) by June 2026, in just under 3.5 years. Buy.
Introduction
Microsoft released their Q2 FY23 results Tuesday evening. MSFT stock initially gained 5% in after-market trading, then fell 4.4% at one point this morning, and is down 1% as of 12:10 Eastern Standard Time. The share price is still down 17% in the past year.
Microsoft has been a core holding for us since 2014, and we initiated our Buy rating on Seeking…