This week will be an exciting week for earning season as Microsoft (MSFT), the one of three members of the Trillion Dollar Club (also known as the 4-comma club) will release its Q1 result on 27th October 2020 after hours. In its 2020 Quarter 4 reports late in July, Microsoft reported results that beat Wall Street and profit expectation as lockdown boosted revenue up to $38 billion (13% increase y/y) and earnings per share at $1.46.
In general, Microsoft Corp. (MSFT) stock has outperformed S&P 500 in 2020, rising more than 30% year to date. Covid-19 has been a blessing in disguise for Microsoft as the pandemic caused millions of clients to work remotely from home and the subscription demand for Azure, Microsoft’s Intelligent Cloud business, remained steady. Microsoft’s cloud computing business has seen incredible growth in the past few years, nearly doubling its quarterly sales since 2017.
For Q1 FY 2021, most analysts predict that the company will see steady improvements in revenue as they expect Intelligent Cloud revenue to post strong gains, but significantly slower than the same period year-over-year (YOY). Microsoft Corp. will publish fiscal year Q1 2021 financial results after the close of the market on Tuesday, October 27, 2020. The tech giant is expected to report adjusted earnings per share of $1.54 (prior-year quarter = $1.38). Revenue is projected at ~$35.7 billion, up from $33.05 billion a year ago.
Shares of Microsoft were trading at $209.41 as of market close October 26. Over a 12-month period, shares are up more than 50%. Given that the historical returns are generally positive, long-term investors should be satisfied going into this earnings release. Both Zacks and TheStreet rate the MSFT stock a BUY call. The polled analysts offering 12-month price forecasts for MSFT have a median target of $241.50, with a high estimate of $260.00 and a low estimate of $208.00. The median estimate represents a +15.32 % increase from the last price of 209.41
It has been a bullish year for Microsoft (MT5 DMA symbol: #Microsoft); its price reached the all-time high at $232.84 on August 30 and then slightly declined and is currently traded at $209.41. The weekly chart shows that this week’s price is open below the Tenkan-sen line and Monday close is near to 23.6% Fibonacci retracement. Up-Kumo still expanding and showing upward momentum. On the Daily chart, MSFT price is currently traded below the Kijun-sen line and Span-B cloud. It has also tested the uptrend trendline. The RSI-14 value is currently lower than 50.
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Tunku Ishak Al-Irsyad – Market Analyst – HF Education Office Malaysia
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