Microsoft Corporation MSFT 0.38% shares are soaring more than 4.0 percent in a weak session on Friday following a strong Q3 earnings report. William Blair analyst Jason Ader believes the company’s cloud computing numbers are most impressive of all.
Following the report, Ader has upgraded Microsoft from Market Perform to Outperform based on the company’s potential to gain major IT market share in coming years.
“Looking back on our initiation report from July 18, 2016, we believe we underestimated both the net impact of cloud revenue growth on the overall business and the cloud gross margin trajectory,” Ader explained.
According to Ader, William Blair’s checks indicate that Microsoft is a trusted name among enterprises that are transitioning to the cloud, and he believes that transition is still in the early stages.
Given Microsoft’s impressive cloud growth, Ader predicts that the stock’s enterprise-value-to-free-cash-flow multiple has room for expansion.
Microsoft’s cloud segment delivered more than $13 billion in annualized revenue in Q3, up about 60 percent year-over-year (Y/Y). In addition, commercial cloud gross margins jumped 7.0 percent to 49 percent Y/Y. William Blair believes…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
