Microsoft (MSFTShares jumped on Wednesday after the leading software company beat Wall Street targets for its fiscal third-quarter thanks to a strong performance in its cloud computing business. The company also trended upwards during the current period. MSFT stock rose more than 6% on the news.
The Redmond, Washington-based company said late Tuesday that it earned $2.45 a share on sales of $52.9 billion for the quarter ended March 31. Analysts polled by Facttest had forecast earnings of $2.24 per share on sales of $51 billion. On a year-over-year basis, Microsoft’s profits were up 10% while sales advanced 7%.
Microsoft Cloud sales increased 22% to $28.5 billion in the March quarter.
CEO Satya Nadella said New release.
MSFT stock is up based on earnings and guidance
For the current quarter, Microsoft projected revenue of $54.85 billion to $55.85 billion. The midpoint of $55.35 billion was above Wall Street’s target of $54.7 billion for the June quarter.
Chief Financial Officer Amy Hood said on a conference call with analysts that Microsoft expects “another quarter of healthy growth in revenue.”
In today’s stock market morning trade, MSFT stock rose 6.9% to 294.40. During the regular session on Tuesday, MSFT stock fell 2.3% to close at 275.42, during a rough day overall for stocks.
Among Microsoft’s three business sectors, Intelligent Cloud was the best performer in the March quarter. Revenue in this segment increased 16% year over year to $22.1 billion. The unit includes server products and cloud services such as Azure.
Microsoft’s Business Operations and Productivity unit saw sales increase 11% to $17.5 billion. The division includes Office productivity software as well as Business Dynamics and LinkedIn.
Finally, Microsoft’s personal computing unit saw sales drop 9% to $13.3 billion. The module includes Windows PC Software, Xbox Video Games, Surface PCs, Internet Search, and Advertising.
Analysts raise price targets on Microsoft
More than two dozen Wall Street analysts raised their price targets on MSFT stock after the upbeat earnings report.
“Cloud growth and the overall outlook for the June quarter was strong and much better than feared given the recent noise in the market,” Wedbush Securities analyst Dan Ives said in a note to clients. He reiterated his outperformance rating on MSFT stock and raised his price target to 325 from 315.
The Activision deal hits another snag
In other news, the UK Competition and Markets Authority On Wednesday, Microsoft blocked its $69 billion acquisition of a video game publisher Activision Blizzard (ATVI). Microsoft said it plans to appeal the ruling.
The antitrust authority said it believes “the deal will change the future of the fast-growing cloud gaming market, leading to less innovation and fewer choices for UK players over the coming years.”
The UK action reduces Microsoft’s chances of closing the deal.
“While Microsoft and Activision have indicated they will resume, we believe the chances of success are no more than 10%,” TD Coin analyst Doug Creutz said in a note to clients.
On Tuesday, and New York Post It reported that Microsoft was preparing to complete the purchase of Activision, despite a move by the Federal Trade Commission in December to block the deal due to antitrust concerns. Microsoft has announced its intention to buy the video game publisher in January 2022.
Microsoft is a long-term leader
MSFT stock has an IBD Composite rating of 94 out of 99, according to IBD stock check. That puts Microsoft in the top 6% of stock performers over the past 12 months.
The IBD Composite Rating combines five separate property ratings into one easy-to-use rating. The best growth stocks have a composite rating of 90 or better.
Furthermore, MSFT stock is on the IBD Tech Leaders List and in the IBD Long-Term Leaders Portfolio.
Microsoft stock got a boost this year from the company’s efforts to infuse artificial intelligence into its software and services.
Follow Patrick Seitz on Twitter at @employee For more stories on consumer technologies, software and semiconductor stocks.
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