Microsoft Corporation MSFT is scheduled to report first quarter results on Tuesday after market close.
The Microsoft Analyst: Wedbush Analyst Daniel Ive retained an outperform rating and $320 price target for Microsoft shares pre-press.
The analyst also named the stock as one of the company’s top tech picks through 2023.
The Microsoft takeaways: Given the macroeconomic backdrop for global enterprise and cloud spending, The Street will be closely monitoring Microsoft’s earnings report and guidance to determine whether demand for cloud spending remains healthy, Ives said in a note.
Despite FX woes, Microsoft could meet or slightly beat Street’s $49.7 billion revenue estimate, the analyst said.
He attributes the optimism to some cloud strength on the federal/corporate front. The analyst said he views the consensus EPS estimate of $2.31 as conservative due to the company’s aggressive cost-cutting initiatives.
See also: Why This Microsoft Analyst Lowers Price Target Ahead of Q1 Results
The company expects productivity and business process revenue of $15.95 billion to $16.25 billion and intelligent cloud revenue of $20.30 billion to $20.6 billion with revenue growth of 43% for Azure, Ives said .
Azure growth, the analyst said, may have held up relatively well, barring some weakness in Europe and small and medium-sized businesses.
Personal computing sales could slow due to slowing demand, which could be a headwind for Microsoft, the analyst said. The company had forecast sales of $13 billion to $13.4 billion for the segment, he said.
“However, this dynamic is well understood by the Street, which is totally focused on the company’s Azure and cloud growth, which is the lynchpin of Microsoft’s long-term bull thesis,” Ives said.
MSFT Price Action: Microsoft shares closed Friday’s session at $242.12, up 2.53% Benzinga Pro data.
Continue reading: How to buy Microsoft (MSFT) stock
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