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Microsoft share price: Q4 earnings preview

We examine when the tech giant will report its fourth quarter results, what analysts currently think of the stock, and Microsoft’s own Q4 guidance.

When will Microsoft report its next quarterly results?

Microsoft (MSFT) is set to report its fourth quarter (Q4) earnings results for fiscal 2020, this Wednesday, 22 July.

Analysts remain bullish on the tech giant

Even though the Microsoft share price has rallied 46% in the last year – last trading on a market capitalisation in excess of US$1.5 trillion – analysts remain bullish on the tech stock’s prospects, with the company commanding a Buy rating on average, according to MarketWatch.

All up, the current average analyst price target on MSFT stands at US$218.02 per share, implying some potential upside for traders and investors at current price levels, also according to MarketWatch.

At the time of writing, Microsoft traded at US$202.88 per share.

Recent results and Q4 guidance in focus

While Microsoft currently represents one of the most expensive publicly listed US companies in terms of market capitalisation – it is currently trading on an earnings multiple of 33.8x, significantly lower than it did towards the end of 2017.

Specifically, for the quarter ending 31 December, Microsoft traded at a heady 57.34x earnings multiple, before this key metric fell sharply over the following quarters. Since then however, Microsoft's share price and price-to-earnings ratio have ticked higher, driven by investors potentially favouring the tech giant’s growth prospects and stability.

Moreover, despite Microsoft's monolithic size – as part of the company’s latest quarterly (Q3) results, ending 31 March, the company reported double-digit top and bottom-line growth. Since then the stock is up close to 15%.

Looking at the company’s Q3 results on a more granular level, Microsoft reported total revenue of US$35.0 billion (+15%), against net income of US$10.8 billion (+22%) and earnings per share (EPS) of US$1.30 (+23%). Elsewhere, Microsoft's Intelligent Cloud segment continues to grow strongly, with cloud revenue soaring 27% to US$12.3 billion for the quarter.

Mind you, in spite of the stock’s recent run up, the company noted that the coronavirus has impacted operations to a degree, saying:

‘In the final weeks of the quarter, there was a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn.’

The company added that ‘The effects of COVID-19 may not be fully reflected in the financial results until future periods.’

Looking forward, as part of Microsoft's Q3 results, the tech giant provided the following guidance:

  • Productivity and Business Processes revenues of between US$11.65 billion to US$11.95 billion
  • Intelligent Cloud revenues of between US$12.9 billion to US$13.15 billion
  • More Personal Computing revenues of between US$11.3 billion to US$11.7 billion
  • Operating expenses of between US$11.8 billion to US$11.9 billion

Investors will likely be keen to see Microsoft hit or exceed those guidance figures when the tech giant reveals its fourth quarter results this Wednesday.

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