Microsoft (MSFT) – Get Report has received a share price appreciation from Jefferies analyst Brent Thill, who sees a solid earnings report from the tech giant on Tuesday.
He raised his target from $310 on the stock to $335 and maintained his buy recommendation for the software company.
Microsoft was trading $288.70, down 0.33%, in premarket trading. It is up 26% in the past six months amid strong financial performance.
“Microsoft has significantly outperformed the software index so far, up 30% from the software index, raising the bar slightly for MSFT stocks going in the fiscal 2021 earnings report. Thill said.
Expectations for the quarter ended June 30 “are achievable, supported by MSFT’s diverse portfolio, including Azure and Teams, driving upselling,” he said.
“Key points to keep an eye on are fiscal margin pressures in 2022, heightened expectations and more color on recent merger acquisitions and broader ambitions,” Thill added.
Potential strengths in earnings report include commercial RPO [recovery point objectives] growth”, Windows OEM [original equipment manufacturer] and favorable seasonality, Thill said:
Microsoft’s operating margins should “improve modestly over time, but will face headwinds over the next two years as MSFT invests in the company and rolls around pandemic-related savings,” he said.
Thill also sees Microsoft “integrating successfully with all of its mergers and acquisitions.” And he sees “potential” for dividends and share buybacks.
Meanwhile, Jim Cramer of TheStreet last week explained why Salesforce’s (CRM) – Get Report planned acquisition of Slack (WORK) – Get Report will give Salesforce Chief Executive Marc Benioff the tools he needs to take on Microsoft.