Upbeat Forecast Helps Microsoft Stock Brush Off Earnings Miss

Analysts and options traders are both chiming in after the event

Digital Content Manager
Jul 27, 2022 at 10:36 AM
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Microsoft Corporation (NASDAQ:MSFT) is managing a post-earnings pop this morning, last seen up 4% at $262.39, even after the tech giant's fiscal fourth-quarter earnings of $2.23 per share and revenue missed analysts' expectations. Microsoft blamed slower PC sales, as well as sluggish cloud infrastructure growth, which brought it to its slowest rise in profits in two years. However, the company also issued an upbeat current-quarter forecast, estimating a double-digit percentage increase for its sales and operating income. 

The stock was hit with a price-target cut from Wells Fargo right ahead of earnings, and analysts are still chiming in. No less than six brokerages have lowered their price objectives, including Citigroup to $300 from $330. Meanwhile, BMO lifted its price target to $320 from $305. The 12-month consensus price target now sits at $342.60, which is a 29.9% premium to current levels. 

Options traders are also circling MSFT this morning. So far, 103,000 calls and 78,000 puts have been exchanged, which is four times the intraday average. The most popular position is the weekly 7/29 265-strike call, followed by the 270-strike call in the same weekly series. 

Today's pop puts Microsoft stock back above its 60-day moving average -- a trendline it's been dancing around for the better part of July. The 70-day moving average and the $265 level still loom just above as potential resistance, though, keeping MSFT at a 21.5% year-to-date deficit. 

 

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