Microsoft stock can still go higher because of the strong growth in its cloud-computing business, according to Bernstein.
Late Wednesday, Microsoft (ticker: MSFT) reported financial results that handily beat Wall Street expectations. The company posted adjusted fiscal second-quarter earnings per share of $1.51, above the $1.32 Wall Street consensus. Revenue of $36.9 billion beat estimates of $35.7 billion.
On Thursday, Bernstein analyst Mark Moerdler reaffirmed his Outperform rating for Microsoft shares, citing the company’s stellar earnings report. He also raised his price target for the stock to $203 from $174.
“This was again another strong quarter as Microsoft continues to deliver Commercial Cloud growth as well as growth in numerous other areas,” he wrote. “The cloud story continues to be very strong...probably surprising many investors.”
Microsoft stock was up 3% to $172.99 on Thursday.
Fiscal second-quarter sales in the company’s Azure segment, where its cloud-computing business resides, rose 62% year-over-year.
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Stifel analyst Brad Reback also said on Wednesday that Microsoft was clearly benefiting from stronger corporate cloud deal activity over the last few quarters, positioning it for sustainable double-digit growth going forward.
Microsoft’s cloud traction is a big reason why its shares significantly outperformed the market in 2019. The stock rose 55% last year amid investor enthusiasm over the company’s Azure cloud-computing business and its success in selling software subscriptions such as Office 365.
Wall Street analysts are optimistic that Microsoft will outperform again in 2020, with 91% having a Buy or Overweight rating on the company, according to FactSet.
Write to Tae Kim at tae.kim@barrons.com
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January 30, 2020 at 10:44PM
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Microsoft Stock Gains After Wall Street Gushes Over Its Cloud Results - Barron's
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