How Will Microsoft Earnings Fare Against Big Tech Peers?

Microsoft Corp. (NASDAQ: MSFT | MSFT Price Prediction) is scheduled to release its fiscal third-quarter results after the markets close on Wednesday. The consensus forecast is $1.26 in earnings per share (EPS) and $33.66 billion in revenue. The same period of last year reportedly had $1.14 in EPS and $30.57 billion.

During the prior quarter, Intelligent cloud revenue rose 27% and Windows OEM revenue rose 18% on a nominal basis. The company claimed 37.2 million subscribers to its Office 365 Consumer subscription base. Revenue growth in the company’s Azure platform rose 62% year over year.

At the same time, revenue from sales of the company’s Surface rose by 6% and search advertising revenue rose 6%, excluding traffic acquisition costs. LinkedIn revenue rose 24% year over year and Xbox content and services revenue fell by 11%.

Also, in March Microsoft announced that it now has over a billion active machines running the Windows 10 operating system. Note that this number includes Xbox Ones, laptops, personal computers and more.

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The good news here is that while Microsoft hit the original goal that it set for devices running Windows 10, this goal was reached two years later than expected. Most of this delay was due to competition with Apple and Alphabet. We will see how all these companies stack up against each other with earnings this week.

Alphabet has already reported its quarterly numbers and investors seem to be very happy with the results. Apple and Amazon are set to report Thursday after the markets close.

Excluding Wednesday’s move, Microsoft stock had outperformed the broad markets with a gain of about 8% year to date. In the past 52 weeks, the share price was up about 31%.

Here’s what a few analysts had to say ahead of the report:

• Jefferies has a Buy rating with a $200 price target.
• RBC has an Outperform rating and a $190 price target.
• Mizuho’s Buy rating comes with a $200 target price.
• Cowen has an Outperform rating and a $190 price target.
• Merrill Lynch has a Buy rating with a $190 target price.
• Morgan Stanley rates its as Buy with a $180 price target.

Microsoft stock was last seen up about 2% at $173.17, with a 52-week range of $119.01 to $190.70. The consensus analyst price target is $186.61.

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