Microsoft price target raised at Jefferies ahead of FQ1 earnings, expecting continued Azure strength

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(Seeking Alpha) – Ahead of the fiscal Q1 results, Jefferies raises its Microsoft (NASDAQ:MSFT) price target from $240 to $260.

Analyst Brent Thill calls Microsoft “one of the best pillars in software, with a durable financial model featuring near double-digit rev growth.”

Thill forecasts ongoing strength for the Azure cloud platform “as it benefits from an increased shift to cloud computing in the WFH environment and likely offsets any on-premise license weakness.”

But Thill says the margin outlook “may be tepid given it appears to be an investment year” and notes that MSFT’s valuation is currently at a nearly 20-year high.

Microsoft will report earnings on October 27 after the bell. Consensus estimates expect $45.8B in revenue and $1.54 EPS.

Last quarter, Microsoft reported 50% Y/Y Azure growth, which had decelerated one percentage point from the prior quarter.

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