Microsoft: Strong FY23 Finish, But Down 6% Since Results

Company Update (MSFT US) (Buy)

Highlights

• Excluding FX, EPS grew 12% in FY23 (23% in Q4)

• Revenue is growing at 10%+ in the 2 key segments

• EBIT margin is expected to be stable in FY24

• Q1 FY24 guidance implies a 12% EPS growth

• We see 44% upside (13.5% p.a.) by June 2026. Buy

Introduction

Microsoft released Q4 FY23 results after markets closed on Tuesday (July 25). Shares fell 3.8% the day after but remain 26% higher than a year ago, having risen by 214% in the past 5 years:

MSFT Share Price (Last 5 Years)

Source: Google Finance (26-Jul-23).

At the time of writing (3 pm EST, July 27), shares are down another 2%, taking the decline since results to 6%.

Microsoft has been a core holding for us since 2014, and we started publishing our research online with a Buy rating in December 2020. Since then, Microsoft shares have gained 53% (including dividends) in 2.5 years. (For a recap of our investment case, see our first Substack article on Microsoft published in May.)

Q4 FY23 results show that our investment case is on track. The two en…