(ticker: MSFT) has jousted with
(AAPL) for the mantle of most-valuable public tech company the past few months, but if the software giant’s earnings next week are as good as two new research notes expect, it could have an advantage.
and KeyBanc Capital Markets expect big things when Microsoft reports its fiscal third-quarter earnings on April 24.
Microsoft “represents the best risk/reward in software,” wrote Morgan Stanley analyst Keith Weiss in a note Wednesday. He gave Microsoft stock an Overweight rating and price target of $140, 16% higher than its closing price on Tuesday.
Microsoft shares were up slightly at $121.23 on Wednesday.
Weiss, who earlier this month said Microsoft is well-positioned to benefit from rising software spending in the year ahead, predicts across-the-board growth in all businesses. He forecast jumps in quarterly sales for Azure, Microsoft’s cloud-computing service (up 70% year-over-year), commercial cloud (more than 40%), and Office 365 commercial (more than 30%).
Weiss also expects strong guidance from Microsoft for its current fiscal fourth quarter, leading him to forecast earnings of $1.24 per share and revenue of $32.86 billion, both topping Wall Street estimates.
KeyBanc analyst Brent Bracelin is equally ebullient.
In a note late Tuesday, Bracelin said he expects annual recurring revenue subscriptions for Office 365 could exceed $20 billion for the first time, and $12 billion for Azure.
“We see the March quarter as another positive milestone and part of a broader multi-year cloud and digital journey that has structurally improved the business model drivers and prospects of sustaining double-digit annual growth,” says Bracelin, who raised his price target to $141 from $125.
Microsoft reports fiscal third-quarter earnings after the market closes April 24. Analysts polled by FactSet expect earnings of $1 per share on revenue of $29.89 billion. In the same quarter a year ago, Microsoft earned 95 cents per share on $26.8 billion in revenue.
Write to Jon Swartz at firstname.lastname@example.org