What to Expect From Microsoft Earnings

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Microsoft Corp. (NASDAQ: MSFT) is scheduled to report its fiscal second-quarter financial results after the markets close on Thursday. The consensus estimates from Thomson Reuters call for $0.71 in earnings per share (EPS) on $25.26 billion in revenue. The same period from last year had $0.71 in EPS on $26.47 billion in revenue.

This top technology stock that gives investors a degree of mega-cap tech safety, and it has a massive $99 billion sitting on the balance sheet. Microsoft continues to find an increasing amount of support from portfolio managers who have added the software giant to their holdings at an increasingly faster pace this past year.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon.com Inc.’s (NASDAQ: AMZN) AWS service, but they maintain that Microsoft is discounting Azure for large enterprises such that Azure may be cheaper than AWS for larger users.

Top analysts believe the company continues to make steady progress with its cloud transition and expect Office 365 and Azure to be solid contributors to top and bottom lines for the next several years. While not likely to snag the top slot from Amazon, it could add huge incremental revenue for years to come.

With gaming revenues growing at a huge pace, the Xbox continues to gain ever more fans as the ultimate console to own. The company continues to upgrade the popular device, and many think that it could dominate Sony’s PlayStation down the road.

A few analysts weighed in on Microsoft prior to its earnings report:

  • Sanford Bernstein has a Buy rating and a $64 price target.
  • BMO Capital Markets reiterated an Outperform rating with a $64 price target.
  • Piper Jaffray upgraded to a Buy rating.
  • RBR upgraded to an Overweight rating from Equal Weight with a price target of $66.

So far in 2016, Microsoft is more or less in line with the broad markets, with the stock down over 7% year to date. Over the past 52 weeks, the stock is up 23%.

Shares of Microsoft were trading at $51.78 on Thursday, with a consensus analyst price target of $58.00 and a 52-week trading range of $39.72 to $56.85.