Amid growing signs of accelerating corporate IT spending, Wall Street analysts are setting expectations for:
which will report its fiscal fourth quarter results on Tuesday.
Bullish sentiment has pushed Microsoft stock (ticker: MSFT) to an all-time high. The stock is up 1.7% in recent trading to $286.11. It’s up nearly 29% so far, pushing the company’s market cap to $2.1 trillion, just trailing
(AAPL) at $2.5 trillion.
Street consensus calls for Microsoft revenue of $44.1 billion and earnings of $1.90 per share. Microsoft provides guidance for each of the three reporting segments; at the high end of the projected range for each, revenue would be $44.5 billion.
Microsoft forecast revenue of $13.8 billion to $14.05 billion for the Productivity and Business Processes segment (including Office) in June; for Intelligent Cloud (including Azure), $16.2 billion to $16.45 billion; and for More Personal Computing (including Windows and Xbox), $13.6 billion to $14 billion.
For the September quarter, the Street consensus calls for revenue of $42.5 billion and earnings of $1.95 per share.
Wall Street’s software analysts are busily examining Microsoft’s partners and resellers for clues for the quarter, and all are finding reasons for optimism.
Citigroup analyst Tyler Radke on Thursday, he reiterated his buy recommendation for Microsoft stock and his price target jumped from $310 to a street-high $378, following a survey of IT resellers. His new target implies a 35% increase from Wednesday’s closing level. Radke expects a strong finish to the company’s fiscal year, driven by recovering IT budgets, re-acceleration in Azure and continued strength in personal computer sales. He writes that Microsoft remains his favorite choice in the mega-cap software sector, with “multiple levers” for double-digit growth.
BofA Securities analyst Brad Sills also reiterates a buy rating after a series of “channel checks,” as he raises his target from $305 to $325. He thinks revenue could beat the consensus by 2% to 3%, driven by strong demand for Azure and Office 365. Sills believes Azure can continue to grow at more than 50%, after growing 59% in the March quarter. (He notes that the company gets a relatively easy comparison on Azure, growing 47% in the previous year’s quarter.)
KeyBanc analyst Michael Turits maintains its Overweight rating on Microsoft as it raises its target from $305 to $330. His call is part of an overall optimistic view of IT spending in the June quarter, based on a reseller survey. He says respondents are now seeing 5.6% growth in 2021 IT budgets, up from 4.6% in the first quarter version of the same survey. Turits writes that the research shows that the strategic importance of Microsoft is increasing. He also raised goals on
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