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Microsoft share price and Q4 2022 results preview

What to expect and how to trade Microsoft’s upcoming results.

When are the Microsoft results expected?

The Microsoft Corporation is set to release its fourth quarter (Q4) 2022 results on 26 July 2022. The results are for the fiscal quarter ending June 2022.

What is ‘The Street’s’ expectation for the Q4 2022 results?

‘The Street’ expectations for the upcoming results are as follows:

  • Revenue of $52.474 billion : +13.7% year on year (YoY)
  • Earnings per share (EPS): $2.30 (+6% YoY)

Investors are expecting revenue to be boosted by high cloud service demand amid growing customer adoption, despite a surging US dollar and economic headwinds. Microsoft historically achieves around 50% of its revenues outside of its home market and has therefore to some degree been affected by the rising dollar but the ongoing move away from the Personal Computing (PC) business to cloud computing across the globe should compensate for this.

After all Microsoft's Intelligent Cloud business overtook the previously dominating PC business in the third financial quarter of 2021, generating $19.1bl in revenues, and it is also the fastest-growing business with year over year growth of close to 30%. Even a possible recession is unlikely to dampen demand to a large extent as companies look to reduce their costs and achieve efficiencies by migrating to cloud platforms which allow them to scale.

How to trade Microsoft into the results

Microsoft analyst recommendations Source: Refinitiv

Refinitiv data shows a consensus analyst rating of ‘buy’ for Microsoft – 19 strong buy, 30 buy and 3 hold - with the median of estimates suggesting a long-term price target of $349.50 for the share, roughly 37% higher than the current price (as of 19 July 2022).

Microsoft client sentiment Source: IG

IG sentiment data shows that 94% of clients with open positions on the share (as of 19 July 2022) expect the price to rise over the near term, while 6% of these clients expect the price to fall.

Microsoft Corporation – technical view

MSFT-Daily Source: IT-Finance.com
MSFT-Daily Source: IT-Finance.com

The Microsoft share price has been trading in a downtrend channel since the beginning of the year, down by around 25% year-to-date, and would need to rise above the second to last reaction high on the weekly chart at the early June high at $277.64 in order to form a medium-term bullish reversal pattern. A reaction high is formed when a candle’s high is higher than that of the candle to its left and also the one to its right.

While the late June high, the second to last reaction high on the daily chart, at $270.43 isn’t overcome, the downtrend remains entrenched with the June low at $241.53, the 50% retracement of the 2020-to-2022 bull market at $239.00, and the May 2021 low at $235.42 remaining potential downside targets. Further down sits the August 2020 high at $229.29.

From a purely technical perspective, short-term traders who are long might consider using a daily close below $241.53 as a stop loss for their trade.

Summary

  • Microsoft Corporation is set to release Q4 2022 results on 26 July 2022
  • Q4 2022 results are expected to show a YoY increase in both revenue and EPS
  • Revenue is expected to be boosted by high cloud service demand amid growing customer adoption, despite a surging US dollar and risks to the economy
  • Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of $349.50
  • 94% of IG’s clients with open positions are long the share
  • The Microsoft share price has been trading in a downtrend channel since the beginning of the year and would need to see a daily chart close above the June high to form a bullish reversal pattern.

MSFT- Weekly Source: IT-Finance.com
MSFT- Weekly Source: IT-Finance.com

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