The cloud computing sector is showing a clear slowdown, while the personal computer sector has been a disaster for the past few months, two figures that Microsoft management seems to have used to lower its expectations. (Photo: 123RF)
What to do with Microsoft, WSP and Electric Lion titles? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.
Microsoft (MSFT, US$250.66): lower forecast
Microsoft management has lowered its revenue forecast by the end of 2024, which could change investor expectations as well as slow the growth of its title, estimates the firm Wedbush.
Analyst Daniel Ives notes that nothing has been sticking with Microsoft recently despite the fact that the markets are down. If analysts held their breath to see if the US computer giant was going to hit those targets every quarter, it could do well.
However, that may change, he believes. Microsoft management has just revised its forecasts downwards, both for the second quarter of 2023 and for the fiscal years 2023 and 2024. Revenue targets thus drop from US$56.8 billion to $52.9 billion. US for the second quarter, with total growth therefore decreasing from 9.8% to 2.2%. For the year 2023, it is a drop from US$226 billion to US$217.7 billion (growth that falls from 14% to 9.8%). For 2024, revenue decreases from US$257 billion to US$248.5 billion (revised growth of 13.7% to 14.8% due to projected lower revenue for 2023).
Daniel Ives points out that the cloud computing sector is showing a clear slowdown, while the personal computer sector has been a disaster for the past few months, two data that Microsoft management seems to have used to revise its expectations downwards. What remains to be discovered now is whether this is just a tough time to pass or if it is still a repositioning of the company to drive up the price of its title.
Wedbush believes that the cloud component as well as Office 365/Windows will take up more and more space and, at the same time, will produce growth and better margins in 2023 and 2024 despite the recession that is looming. the horizon. Daniel Ives added that he is confident that Microsoft is in a good position to weather this economic uncertainty and find itself in a better position after the storm thanks to its cost control strategies already in place.
Despite Wedbush leaning towards a reset of expectations rather than a long-term cut cycle, it is lowering its target price from US$320 to US$290 to reflect its own lower estimates.
WSP (WSP, $161.29): Well positioned to weather the storm