(MSFT) shares remain on a roll today, trading less than a buck below their all-time high, and inching the company’s market cap to $1.079 trillion, nosing past
(AAPL) at $1.067 trillion. And with June quarter earnings due next week, there could be more gains ahead.
Nomura analyst Christopher Eberle added some fuel to the fire this morning, pounding the table on Microsoft shares, while repeating his Buy rating and $161 price target. Eberle says there could be “upside to numbers” when the software giant reports fiscal first quarter results after the close on October 23.
Microsoft’s 40% rally this year has been driven in no small measure by investor enthusiasm for the company’s Azure cloud business, where it competes head-to-head with
(AMZN) Amazon Web Services and
(GOOGL) Google Cloud (GOOGL), among others. Eberle thinks Azure’s business mix — more skewed to larger enterprises than its rivals — should be the least vulnerable to any macro-related slowdown in the startup world.
AWS in particular has generated substantial business from startups relying on cloud services to build businesses quickly but without huge capital expenses. Eberle says that in the event of a slowdown in spending in the startup world, Microsoft is the most insulated to the cloud providers given the bulk of its business is with large enterprises. He thinks Azure could “potentially see acceleration in workload migration as agility and cost reductions become a priority.” Eberle sees the Azure business growing 61.6% in Q1 and 58.2% for all of the June 2020 fiscal year.
The Nomura analyst contends that Microsoft “continued to execute well across all business segments” in the September quarter. He’s looking for more details from Microsoft on “increasingly larger Azure deals,” as more “tier 1 workloads move to the cloud.”
Street consensus calls for Microsoft to post fiscal Q1 revenues of $32.2 billion, and profits of $1.24 a share.
MSFT today is up 1.3%, to $141.40.
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