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Microsoft Earnings Preview

Published 29/01/2020, 05:36
Updated 14/12/2017, 10:25

Wall Street is bracing itself for another strong quarter from the tech giant.

When: Wednesday 29th January after market close

Expectations:

  • Revenue $35.69 billion +9.9%
  • EPS $1.32 +20%
  • Microsoft (NASDAQ:MSFT) shares had an impressive 2019, rallying 56% across the year and outpacing the broader US market (S&P gained 22%). Microsoft is now one of the three US companies to be a member of the exclusive $1 trillion dollar club, alongside Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG).

    Azure

    Microsoft (NASDAQ:MSFT) has benefited greatly from its cloud business Azure. In the most recent quarter, Microsoft reported a strong 59% yoy increase in revenue. Traders will be watching closely to Azure’s performance in Q2 of 2020 to see whether this growth can be maintained? Expectations are for a deceleration of growth in the segment in line with the broader trend:

    Azure Revenue increase:

    Q3 2019 75%

    Q4 2019 68%

    Q1 2020 59%

    Q2 2020 53% exp.

    53% growth is still exceptional as Microsoft’s hybrid cloud is well positioned against peers Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). Recent surveys by Morgan Stanley (NYSE:MS) and Credit Suisse (SIX:CSGN) showing that Azure was the preferred cloud enterprise option boding well for the outlook.

    Analysts’ recommendations

    According to FactSet data among 35 analysts covering Microsoft (NASDAQ:MSFT) stock, 33 have a buy rating, 2 have hold and 0 have sell.

    Chart thoughts

    Microsoft (NASDAQ:MSFT) trades above its 50, 100 & 200 sma in a bullish chart. Whilst it tested the 50 sma earlier this week, a rebound in the price means it is currently around 2% above the 50 sma.

    Immediate support can be seen at yesterday’s low $160. Whilst resistance can be seen at the all-time high of $168.19.

    Microsoft 240 Min Chart

    "Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

    Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."

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