Microsoft lowers Q4 outlook: Cramer recommends buying MSFT

By:
on Jun 2, 2022
  • Microsoft Corp lowers its guidance for the current fiscal quarter.
  • Jim Cramer reacts to the news on CNBC's "Squawk on the Street".
  • Shares of the tech giant are down 20% versus the start of 2022.

Microsoft Corporation (NASDAQ: MSFT) blamed “exchange rate” as it lowered its outlook for the current fiscal quarter on Thursday. Shares are down more than 2.0% this morning.

MSFT to miss Wall Street estimates in Q4

The American multinational now forecasts its Q4 earnings and revenue to come in shy of Wall Street expectations. Its revised guidance is for the quarterly revenue to print between $51.94 billion and $52.74 billion on up to $2.32 of adjusted per-share earnings.

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In comparison, the Refinitiv consensus is for $2.33 of EPS (adjusted) on $52.87 billion in revenue. CFO Amy Hood had already warned in April that unfavourable FX movements could weigh on Q4 performance.

We expect other income and expense to be negative $50 million, reflecting FX remeasurement impact based on market conditions in April. Similar to the rest of our guidance, further equity and FX movements through Q4 are not reflected in this number.

Jim Cramer reacts to the news

Despite lowered guidance, Jim Cramer, for one, recommends against selling MSFT. In fact, he’s in favour of using the sell-off on Thursday to buy shares of the tech behemoth. On CNBC’s “Squawk on the Street”, he said:

Microsoft is a great American company. If you buy it today, the dollar isn’t going to fall again tomorrow. You might have an opportunity here. You’re selling because others are selling it. That’s wrong money management.

In April, MarketRebellion.com’s Pete Najarian said Microsoft at 27 times was still inexpensive. The stock is still trading at a PE multiple of 28.   

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