What to Watch When Microsoft Reports Late Wednesday

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Microsoft Corp. (NASDAQ: MSFT) is set to report its most recent quarterly results after the markets close on Wednesday. Consensus estimates call for $1.00 in earnings per share (EPS) and $29.84 billion in revenue for the fiscal third quarter. The same period of last year reportedly had $0.95 in EPS and $26.82 billion in revenue.

This tech giant saw one of the most bullish analysts on Wall Street get even deeper conviction about the company’s upside ahead. Wedbush Securities already had Microsoft rated as Outperform with a $140 price target, but the firm added the stock to its Best Ideas List and sees substantial upside ahead earlier this quarter.

As far as what a $140 target looks like compared with peers, particularly since it implies Microsoft is worth over $1 trillion, the consensus analyst target price was $129.25 on last look, and the range of most bearish to most positive was $75 to $160.

Wedbush’s Daniel Ives believes that Microsoft’s Azure platform, Office 365 and enhanced artificial intelligence capabilities, along with a major partner and sales force push, are a unique value proposition that puts Microsoft in a differentiated position to drive cloud sales for 2019 and beyond and help shape the future growth trajectory. These expectations mean that Microsoft would go over the $1 trillion dollar market cap during 2019.

The call from Ives said:

Microsoft remains in an enviable position heading into the next 12 to 18 months on the heels of its cloud success and is firing on all cylinders around its Office 365 and Azure strategic vision based on our recent checks in the field. We believe the shift to cloud is a major secular trend that is significantly benefiting MSFT in the field as a key tailwind and should continue its momentum heading into the next 12 to 18 months in our opinion. With roughly 30% of workloads in the cloud today and poised to hit 55% by 2022, we believe Nadella & Co. are in the catbirds seat to get more of these complex workloads (e.g. AI, machine learning, etc.) as more enterprises take the leap to a hybrid cloud architecture over the coming years.

24/7 Wall St. has pointed out that Microsoft was one of the companies buying back the most stock last year and that Satya Nadella was one of the highest paid CEOs. In fact, Microsoft is one of America’s highest paying companies overall.

Microsoft has outperformed the broad markets, with its stock up about 23.5% year to date. In the past 52 weeks, the stock is actually up about 32%.

Shares of Microsoft were last seen trading at $125.03, in a 52-week range of $90.28 to $125.85. The consensus price target is $129.25.

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