Microsoft
Over the past 12 months, shares of Microsoft Corp. (NASDAQ: MSFT) have dropped about 22% from their share price. Since putting up a 52-week high in late November, the stock is down more than 28%. The company just increased its quarterly dividend to $0.68.
Microsoft recently cut about 1,000 jobs and acknowledged that growth is slowing down. But one thing the Redmond giant does that has set it apart since Satya Nadella took over as CEO is lifting the integration burden on a company’s management by offering a soup-to-nuts cloud experience. Not every application Microsoft has is best-of-class, but as a whole, they are better than good enough.
Sentiment for the stock is virtually all positive. Of 50 analysts covering the stock, 48 have a Buy or Strong Buy rating, and two rate the shares at Hold. At a share price of around $242.10, the potential upside based on a median target of $320.00 is about 32%. At the high target of $411.00, the implied gain is nearly 70%.
For its first quarter of fiscal 2023, revenue at the Dow component is forecast at $49.7 billion, down 4.2% sequentially but up 9.5% year over year. Adjusted EPS are forecast at $2.31, up 3.4% sequentially and by 1.8% year over year. For the full fiscal year ending in June, current consensus estimates call for EPS of $10.08, up 9.4%, on revenue of $219.03 billion, up 10.5%.
Microsoft stock trades at about 24.0 times expected 2023 EPS, 20.5 times estimated 2024 earnings of $11.82 and 17.5 times estimated 2025 earnings of $13.80 per share. The stock’s 52-week range is $219.13 to $349.67. Microsoft pays an annual dividend of $2.72 (yield of 1.12%). Total shareholder return over the past year was negative 21.4%.
Visa
Another Dow component reporting after markets close Tuesday is credit card issuer Visa Inc. (NYSE: V). Over the past 12 months, the stock price has declined by about 17%. Analysts appear to be expecting a share price increase of around 4% following the earnings report, likely on expected consumer credit card spending as inflation continues to bite. Combined with the strong showing by U.S. banks, the outlook for Visa and rival Mastercard has improved.
Analysts are strongly bullish on the stock, with 29 of 34 brokerages rating the shares at Buy or Strong Buy. The other five have Hold ratings. At a share price of around $190.40, the implied gain based on a median price target of $254.00 is about 33%. At the high price target of $290.00, the upside potential is 52.6%.
For Visa’s fourth quarter of fiscal 2022, revenue is forecast at $7.56 billion, up 3.9% sequentially and 15.2% higher year over year. Adjusted EPS are forecast at $1.87, down 5.8% sequentially and up 15.4% year over year. For the full fiscal year that ended in September, current consensus estimates call for EPS of $7.43, up 25.7%, on revenue of $29.08 billion, up 20.6%.
Visa stock trades at about 25.6 times expected 2022 EPS, 22.9 times estimated 2023 earnings of $8.32 and 19.6 times estimated 2023 earnings of $9.73 per share. The stock’s 52-week range is $174.60 to $236.96. Visa pays an annual dividend of $1.50 (yield of 0.79%). Total shareholder return for the past 12 months was negative 16.7%.
Originally posted at 24/7 Wall St.
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