Will Microsoft’s Q1 Earnings Boost Its Valuation?

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Microsoft Corp. (NASDAQ: MSFT) is expected to report its most recent quarterly results late on Thursday. The consensus estimates from Thomson Reuters calls for $0.85 in earnings per share and revenue of $25.77 billion. In the same period of last year, the tech giant said it had earnings of $0.70 per share and $23.56 billion in revenue.

Currently, Apple is the most valuable company in America based on market cap and is unlikely to let go of that position in the foreseeable future. However, the race for second place has tightened as Microsoft has caught up with Amazon.

Apple’s market cap is currently $830 billion. Microsoft and Amazon are within a percentage point or so of one another at around $710 billion. A critical difference between the two racing for the spot is that Microsoft’s stock has retreated only marginally in the past five days, while Amazon’s has dropped almost 6%.

Microsoft continues to be a powerhouse in enterprise software, PC software and hardware that includes both tablets and its Xbox game system. While Amazon struggles in its core business, Microsoft makes money on all its major products and services.

Microsoft has outperformed the broad markets with the stock is up 36% in the past 52 weeks. In just 2018 alone, the stock is up 8%.

A few analysts weighed in on Microsoft ahead of the earnings report:

  • Credit Suisse has a Buy rating with a $115 price target.
  • RBC has a Buy rating with a $105 price target.
  • Goldman Sachs has a Buy rating and a $103 price target.
  • Morgan Stanley has an Overweight rating with a $130 target.
  • William Blair has a Buy rating.
  • Deutsche Bank has a Buy rating with a $130 target price.

Shares of Microsoft closed Wednesday at $92.31, with a consensus analyst price target of $105.74 and a 52-week range of $67.14 to $97.24. The stock was up 1.6% at $93.72 in early trading indications Thursday.