Microsoft Might Miss Earnings, however Purchase the Inventory Anyway, Says Analyst

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Oppenheimer warns Microsoft won’t be immune from the slowdown in know-how spending.

On Tuesday, analyst Timothy Horan diminished his value goal for

Microsoft

(ticker:

MSFT

) inventory to $275 from $300, citing softening demand for computer systems.

“A number of market alerts evince demand destruction,” he wrote. PC gross sales “apparently took one other leg down, as each

Samsung

and Micron Know-how (

MU

) slashed outlooks late final week.”

Samsung and Micron make reminiscence chips, that are utilized in shopper electronics, smartphones and computer systems. Final month, executives at Intel and AMD acknowledged the general PC market is faring worse than the already-downbeat outlooks the 2 corporations had given throughout their final earnings experiences.

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Horan lowered his Microsoft fiscal 2023 earnings-per-share estimate to $9.54 from $9.95, versus the Wall Avenue consensus of $10.11, in response to FactSet.

Microsoft inventory is up 3.6% to $249.45 in Tuesday buying and selling that’s broadly upbeat; the

S&P 500

is up 2.8%. Microsoft didn’t instantly reply to a request for touch upon the analyst report.

The analyst can also be involved concerning the state of the European economic system. “A sustained Ukraine battle and accompanying impoverishment of what was as soon as the biggest financial zone (EU) won’t be fast to stabilize,” he wrote.

Regardless of the tougher financial setting he’s nonetheless bullish total on the corporate. The analyst reaffirmed his Outperform ranking for Microsoft on the again of its long-term robust place in cloud computing.

“We proceed to imagine Microsoft is structurally advantaged for market share,” he wrote. “Microsoft is a top-two supplier within the quickly increasing $200B Cloud business, most likely probably the most crucial know-how for the following decade.”

Write to Tae Kim at tae.kim@barrons.com