Erste Group Bank Predicts Higher Earnings for Microsoft

Key Points

• Erste Group Bank raised its FY2027 EPS estimate for Microsoft to $19.32 (from $19.02), well above the current consensus of $16.76, signaling higher expected earnings.
• Microsoft beat its latest quarter with $4.27 EPS (vs. $4.06 expected) and $82.89 billion in revenue (up 18.3% YoY); the stock trades near $421 with a $3.13 trillion market cap and a consensus rating of "Moderate Buy" (target $562.44).
• Near‑term risks include margin pressure from heavy AI spending and large capex guidance, and reports that Microsoft may scale back its 2030 clean‑energy matching target, posing ESG and reputational concerns.

Microsoft Corporation (NASDAQ:MSFT - Free Report) - Equities researchers at Erste Group Bank upped their FY2027 EPS estimates for shares of Microsoft in a research note issued on Tuesday, May 5th. Erste Group Bank analyst H. Engel now forecasts that the software giant will post earnings of $19.32 per share for the year, up from their previous forecast of $19.02. The consensus estimate for Microsoft's current full-year earnings is $16.76 per share.

A number of other research analysts also recently commented on the stock. Citigroup increased their target price on shares of Microsoft from $600.00 to $620.00 and gave the company a "buy" rating in a research report on Thursday, April 30th. Mizuho decreased their price objective on shares of Microsoft from $620.00 to $515.00 and set an "outperform" rating for the company in a research note on Tuesday, April 14th. Daiwa Securities Group dropped their price objective on Microsoft from $630.00 to $600.00 and set a "buy" rating on the stock in a report on Wednesday, February 4th. Jefferies Financial Group reiterated a "buy" rating on shares of Microsoft in a research report on Monday. Finally, BMO Capital Markets reduced their target price on Microsoft from $575.00 to $505.00 and set an "outperform" rating for the company in a report on Tuesday, April 28th. One research analyst has rated the stock with a Strong Buy rating, thirty-eight have issued a Buy rating and seven have assigned a Hold rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and a consensus price target of $562.44.

Microsoft Stock Up 1.7%

MSFT stock opened at $420.93 on Friday. The stock has a market cap of $3.13 trillion, a P/E ratio of 25.06, a PEG ratio of 1.49 and a beta of 1.10. The company has a current ratio of 1.28, a quick ratio of 1.27 and a debt-to-equity ratio of 0.08. Microsoft has a twelve month low of $356.28 and a twelve month high of $555.45. The company's 50 day moving average is $396.79 and its two-hundred day moving average is $445.39.

Microsoft (NASDAQ:MSFT - Get Free Report) last announced its quarterly earnings results on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $4.06 by $0.21. The company had revenue of $82.89 billion during the quarter, compared to the consensus estimate of $81.44 billion. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.Microsoft's revenue for the quarter was up 18.3% on a year-over-year basis. During the same period in the previous year, the business earned $3.46 EPS.

Microsoft Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Thursday, June 11th. Stockholders of record on Thursday, May 21st will be issued a $0.91 dividend. This represents a $3.64 dividend on an annualized basis and a dividend yield of 0.9%. The ex-dividend date of this dividend is Thursday, May 21st. Microsoft's dividend payout ratio is presently 21.67%.

Insider Activity

In related news, EVP Kathleen T. Hogan sold 12,321 shares of the firm's stock in a transaction dated Friday, March 6th. The stock was sold at an average price of $409.52, for a total transaction of $5,045,695.92. Following the transaction, the executive vice president owned 137,933 shares of the company's stock, valued at $56,486,322.16. This trade represents a 8.20% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this link. Also, Director John W. Stanton purchased 5,000 shares of the company's stock in a transaction that occurred on Wednesday, February 18th. The stock was bought at an average price of $397.35 per share, for a total transaction of $1,986,750.00. Following the transaction, the director directly owned 83,905 shares in the company, valued at $33,339,651.75. This trade represents a 6.34% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. 0.03% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On Microsoft

Hedge funds have recently modified their holdings of the stock. Longfellow Investment Management Co. LLC increased its position in Microsoft by 51.3% during the 2nd quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant's stock worth $29,000 after purchasing an additional 20 shares during the period. Bernzott Capital Advisors acquired a new stake in shares of Microsoft in the 4th quarter valued at approximately $34,000. Timmons Wealth Management LLC acquired a new stake in shares of Microsoft in the 4th quarter valued at approximately $36,000. Bayforest Capital Ltd purchased a new stake in shares of Microsoft in the third quarter valued at approximately $38,000. Finally, Fairway Wealth LLC grew its holdings in Microsoft by 287.0% during the fourth quarter. Fairway Wealth LLC now owns 89 shares of the software giant's stock worth $43,000 after acquiring an additional 66 shares during the period. 71.13% of the stock is owned by institutional investors and hedge funds.

Key Microsoft News

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Street‑high analyst views and big upside targets are supporting the stock — at least one note sees ~60% upside and another firm raised its target to $870, boosting sentiment. MSFT price target article Arete Research boost
• Positive Sentiment: Institutional buying: Cryder Capital, Fisher Asset Management and others have added MSFT shares recently — an inflow signal that can prop up the stock. Cryder buy Fisher Asset boost
• Positive Sentiment: Product and go‑to‑market momentum: Dynamics 365 API integrations and partner wins (FPT Frontier designation) strengthen Azure/enterprise monetization and cross‑sell opportunities. Dynamics 365 API Integration FPT Frontier Partner
• Neutral Sentiment: Macro/market commentary: Paul Tudor Jones warns the AI‑led bull market may have "another two years" before a major correction — a cautionary note that can increase volatility but isn't MSFT‑specific. Paul Tudor Jones on AI market
• Neutral Sentiment: Workforce/ops moves: Microsoft rolled out voluntary retirement/buyout details — could cut long‑term costs but entails near‑term severance and program costs. Internal buyout offer
• Negative Sentiment: Margins and capex pressure: Analysts and reports flag temporary margin headwinds from heavy AI spending and a large capex guide — this is the primary near‑term risk to earnings and multiples. Margins headwind
• Negative Sentiment: Reputational/ESG risk: Bloomberg/TechCrunch reports that Microsoft may delay or scale back its 2030 hourly clean‑energy matching target as AI data‑center growth raises power use — this creates regulatory, PR and investor‑sentiment risk. Clean energy target risks

About Microsoft

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft's product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).

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