Microsoft (MSFT) Fires on All Cylinders; Wedbush Reiterates Outperform Rating on the Stock


Microsoft (MSFT) unveiled its latest quarterly earnings results after the bell on Thursday, posting profit that came in well ahead of analysts’ expectations.

The Pacific Northwest tech company posted its fiscal first-quarter results for 2019, starting the fiscal year with a bang as the company’s adjusted earnings tallied up to $1.14 per share. Analysts were calling for the company to amass adjusted earnings of $0.96 cents per share for the period. Total revenues of $29.1 billion (up 19% year over year) beat the Street’s estimates of $27.9 billion as the company’s core Intelligent Cloud business was yet again the “star of the show”. Cloud revenues of $8.6 billion significantly beat the Street’s estimates by 3.5% as the Azure (up 76% year over year) growth story is firing on all cylinders.

Microsoft shares reacted to the news, rising nearly 2.5% to $104.90 in after-hours trading.

Wedbush analyst Daniel Ives commented, “Pro forma EPS of $1.14 came in well above the Street’s $0.96 estimate and speaks to a company that is showing significant double digit top-line growth with a margin and EPS profile that is flowing to the bottom line. Tech investors have been watching their screens with white knuckles over the past few weeks as multiples have been quickly contracting and risk names being thrown out the window regardless of valuation or fundamentals with all eyes on earnings this week. To this point Microsoft just delivered an eye popping cloud beat and a performance that speaks to a secular cloud story which is still in the early innings of playing out and supports our thesis that core enterprise cloud spending is actually accelerating into 2019 with Redmond front and center along with AWS in this two horse race.”

Ives reiterates an Outperform rating on Microsoft shares, with a price target of $140, which represents a potential upside of 37% from where the stock is currently trading. (To watch Ives’ track record, click here)

Ives is not the only fan of the tech giant on Wall Street, as TipRanks analytics exhibit MSFT as a Strong Buy. Based on 17 analysts polled in the last 3 months, 16 rate a Buy on Microsoft stock while 1 maintains a Hold. The 12-month average price target stands at $122.93, marking a 20% upside from where the stock is currently trading. (See MSFT’s price targets and analyst ratings on TipRanks)

 

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