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Microsoft plans to report earnings on Wednesday.
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As Microsoft will report earnings on Wednesday after the close of trading, Wall Street was frantically updating price targets and estimates on Monday to prepare for what could be better-than-expected results.
Microsoft’s fourth fiscal quarter should provide some useful insights into the clash of forces now affecting the business computing sector more broadly. On the one hand, everything related to the cloud is experiencing accelerated growth, and that directly benefits Microsoft Azure, the company’s public cloud service and its cloud-based application sector, which includes Office 365 and Teams. On the other hand, some segments of the economy remain largely closed by the pandemic and are reducing spending in many areas, including technology. Meanwhile, the outlook for Microsoft includes a special bonus on the arrival this fall of the next-gen Xbox gaming console.
For Microsoft (ticker: MSFT), Street seems to think that the cloud and Xbox will overcome the recession.
Stifel analyst Brad Reback repeated his buy rating on Microsoft shares on Monday and raised his target price to $ 215 from $ 200. “As Covid dust settles in the coming quarters, we expect the Organizations of all sizes maintain accelerated cloud migration strategies and that Microsoft should be a key beneficiary by leveraging Tier 1 workloads that were previously out of reach, leading to significant [total addressable market] expansion, ”Reback wrote in a research note.
Raymond James analyst Robert Majek also repeated his Strong Buy rating on Monday, raising his target to $ 225 from $ 208. “We expect a strong quarter powered by the three-headed Hydra at Azure, Office 365 and Gaming, which have been well maintained in today’s remote economy and now represent almost 50% of the company’s revenue, “he wrote. “We remain excited about the company’s long-term, secular growth story as a dominant provider that is consolidating IT spending and its strong competitive position as one of the top three hyperspace cloud providers.”
Jefferies analyst Brent Thill, who also has a buy rating on the stock, raised his target to $ 240 from $ 200. He believes Microsoft will report a strong quarter and should increase revenue by double digits thereafter, with margins at expansion.
Wedbush analyst Dan Ives repeated his Buy rating and $ 260 price target. “We continue to believe that Microsoft is the central name of the cloud for playing this transformational secular trend, as well as for the other side of this dark valley.” he wrote in a research note. “Fundamentally, Microsoft’s thesis during this Covid environment has been a double strategy; The first phase has been developed and continues, as Microsoft’s Azure / Office 365 product portfolio holds up very well in this Category 5 storm, while investors have recognized that this dynamic is driving inventory to record highs. We are now entering the second phase towards the September / December quarters as an anticipated economic rebound should put more fuel into Microsoft’s growth engine. “
Microsoft shares rose 2.8% to $ 208.62 around noon. The Dow Jones industrial average fell 0.2%.
Write to Eric J. Savitz at [email protected]
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