Earnings Update: Microsoft Corporation (NASDAQ:MSFT) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

Shareholders will be ecstatic, with their stake up 22% over the past week following Microsoft Corporation's (NASDAQ:MSFT) latest full-year results. Microsoft reported US$332b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$17.95 beat expectations, being 3.4% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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After the latest results, the 48 analysts covering Microsoft are now predicting revenues of US$390.7b in 2027. If met, this would reflect a solid 18% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 9.0% to US$19.64. Before this earnings report, the analysts had been forecasting revenues of US$385.0b and earnings per share (EPS) of US$19.52 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

Check out our latest analysis for Microsoft

There were no changes to revenue or earnings estimates or the price target of US$562, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Microsoft, with the most bullish analyst valuing it at US$870 and the most bearish at US$400 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Microsoft's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Microsoft is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$562, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Microsoft. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Microsoft analysts - going out to 2029, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Microsoft that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.