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Microsoft Stock Soars to a New High. Earnings Come Tuesday

July 23, 2021
Barron's

Amid growing signs of an acceleration of corporate IT spending, Wall Street analysts have been ratcheting up expectations for Microsoft, which is due to report fiscal fourth-quarter results on Tuesday.

The bullish sentiment has driven Microsoft shares (ticker: MSFT) to new heights. The stock on Friday rallied 1.2%, closing at a record $289.58. The stock is up nearly 31% year to date, driving the company’s market cap to $2.18 trillion, trailing only Apple (AAPL) at $2.48 trillion.

Street consensus calls for Microsoft revenue of $44.1 billion and profits of $1.90 a share. Microsoft provides guidance for each of its three reporting segments; at the top of the projected range for each, revenues would be $44.5 billion.

Microsoft forecast June-quarter revenue from its Productivity and Business Processes segment (which includes Office) of $13.8 billion to $14.05 billion; 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 profits of $1.95 a share.

Wall Street’s software analysts have been busily surveying Microsoft’s partners and resellers for clues to the quarter, and they’re all finding reasons for optimism.

Rosenblatt Securities analyst John McPeake last week boosted his target price on the stock to $333, from $301, while repeating his Buy rating. McPeake contends that Microsoft’s fundamentals are as strong as any time in recent history. “Azure continues to take share, demand for PCs remain robust, and Office, Teams and Dynamics [are] likely to continue to grow in the double digits.”

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