Oppenheimer Reiterates Outperform on Microsoft (MSFT) Following Strong 1Q Report
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Oppenheimer reiterated an Outperform rating and $62.00 price target on Microsoft (NASDAQ: MSFT) following the company's 1Q earnings report. Non-GAAP revenue of $22.3B was up 5%, vs. estimates of $21.6B. EPS was $0.10 above $0.66 estimates, driven by the beat and lower taxes. There were few concerns, but enterprise services revenue did decelerate given the decreasing volume of agreements associated with Windows Server 2003.
Analyst Timothy Horan commented, "In a strong F1Q17 revenue of $22.3B was 3.6% above our $21.6B estimate. Gross margins came in 20bps better than expected driven by commercial cloud gross margins, which expanded 7% seq. due to accelerating growth at Azure (+123%), and Office 365 commercial revenue growth outpaced seat growth by 14% (ex-FX) at 54%. Overall, results point to a successful mobile cloud strategy which is set to overlay artificial intelligence and we believe become a dominant full service cloud/ communication service for enterprises. Multiple recent partnerships and customer wins as well as the pending release of SQL for Linux in the cloud should help drive solid growth over the next few years. Estimates under review; current model attached."
Shares of Microsoft closed at $57.25 yesterday.
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