William Blair's Revised Earnings Forecast for Microsoft

On October 31st, William Blair announced a reduction in its earnings estimates for Microsoft Co. (NASDAQ:MSFT). Analyst J. Ader now expects the software giant to report earnings per share (EPS) of $3.11 for Q2 2025, which is a decrease from previous projections. This adjustment reflects ongoing market assessments and market conditions that have influenced the expected financial performance of Microsoft.

In contrast to William Blair's cautious outlook, other analysts have issued differing projections for Microsoft’s earnings. For example, DA Davidson predicted that Microsoft will achieve an EPS of $3.25 for the same quarter. They have maintained a "Neutral" rating and set a price target of $475.00 on the stock. The consensus for Microsoft's current full-year earnings stands at $13.02 per share, while DA Davidson has estimated the company's earnings for FY2025 at $13.27 and for FY2026 at $15.18.

Recent Earnings Results

Microsoft recently released its quarterly earnings results on October 30th, showing an EPS of $3.30, which surpassed analysts' expectations of $3.08. The company reported a remarkable net margin of 35.61% and a return on equity of 35.73%. Revenue for the quarter reached $65.59 billion, exceeding forecasts of $64.57 billion. This represents a substantial growth of 16.0% compared to the same period last year, when Microsoft recorded an EPS of $2.99.

Analyst Ratings and Price Targets

Various analysts have adjusted their ratings and price targets for Microsoft stock recently. Argus increased its price target from $475.00 to $526.00 and rated Microsoft as a "buy". Meanwhile, TD Cowen lowered its target from $495.00 to $475.00 but also maintained a "buy" rating. Wells Fargo confirmed its "buy" rating, and Morgan Stanley raised its price objective from $506.00 to $548.00, assigning an "overweight" rating. In contrast, UBS Group has decreased its price target from $510.00 to $500.00 while still designating Microsoft as a "buy". Overall, there are 26 analysts with a buy rating for Microsoft, maintaining a consensus rating of "Moderate Buy" and an average price target of $503.03.

Stock Performance and Valuation

Microsoft's stock recently opened at $406.35. With a market capitalization of $3.02 trillion, the stock exhibits a P/E ratio of 33.53 and a price-to-earnings-growth ratio of 2.27. Over the past year, shares have fluctuated between a low of $334.69 and a high of $468.35. Analysts also noted that the company's debt-to-equity ratio is favorable at 0.16, supported by a quick ratio of 1.27.

Institutional Investor Activities

Several institutional investors have made recent adjustments to their shares in Microsoft. For instance, Vanguard Group Inc. has increased its stake by 0.5%, now holding about 667.9 million shares after acquiring more stock. Other institutional players like Capital International Investors and Ameriprise Financial Inc. have also increased their holdings. Notably, hedge funds now control 71.13% of Microsoft’s shares, indicating strong institutional confidence in the company.

Shareholder Returns and Buyback Plans

Microsoft has declared plans to pay a quarterly dividend of $0.83 per share, effective December 12th. This marks an increase from the previous dividend of $0.75, representing a 0.82% yield. Furthermore, the firm has announced a significant stock buyback initiative allowing for $60.00 billion in repurchases, reflecting management's belief that the stock is undervalued and will create value for shareholders.

Conclusion

In summary, while William Blair has lowered its Q2 2025 earnings estimate for Microsoft, other analysts maintain a more optimistic view of the company's financial performance. With strong earnings results, ongoing investor confidence, and a focus on shareholder returns through dividends and buybacks, Microsoft continues to be a significant player in the market.

Microsoft, Earnings, Forecast