Microsoft stock prediction after guiding FQ2 revenue above estimates

On Wednesday, Microsoft Corporation (NASDAQ:MSFT) shares advanced after announcing its most recent quarterly results. The company reported its fiscal first-quarter 2022 revenue and earnings Tuesday after markets closed, beating the consensus for analyst expectations.

The software infrastructure company also issued better-than-expected FQ2 revenue guidance.

Microsoft posted fiscal Q1 non-GAAP earnings per share of $2.27, beating the average for analyst estimates of $2.08. In addition, its GAAP EPS of $2.71 was $0.64 ahead of expectations, while revenue for the quarter grew by 21.8% from the same quarter a year ago to $45.3 billion, exceeding expectations by $1.3 billion.

The Redmond, WA-based technology giant now expects FQ2 revenue in the region of $50.15 billion to $51.05 billion, surpassing the Street forecast of $48.92 billion.

Time to bet on MSFT’s outlook?

From an investment perspective, Microsoft shares trade at reasonable trailing 12-month and forward P/E ratios of 38.50 and 30.62, respectively. 

In addition, analysts expect its earnings per share to grow by 39.70% this year, before rising at an average annual rate of about 15.50% over the next five years.

Therefore, although the valuation multiples may not be appealing to short-term investors, the stock could gain the attention of growth investors.

Technically, Microsoft shares seem to be trading within an ascending channel formation in the hourly chart. However, the stock has recently pulled back to retest the trendline support, creating a perfect opportunity for a rebound.

Therefore, with shares yet to reach overbought conditions, investors could target profits at about $315.40, or higher at $320.07, while $305.13 and $300.21 are crucial support zones.

It could be time to buy MSFT shares

In summary, Microsoft shares have rallied more than 42% this year, the stock has recently pulled back, creating room for a rebound. 

In addition, given the company’s exciting earnings growth prospects and Street-beating FQ1 results, its FQ2 revenue guidance could be a catalyst for a significant rally.