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Microsoft Draws Analyst Plaudits After Earnings Report

'Microsoft delivered revenue growth 5 points ahead of consensus and robust commercial bookings growth,' J.P. Morgan says.

Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report shares were rising slightly Wednesday after the software giant posted fiscal fourth-quarter earnings and sales that topped expectations, eliciting positive reaction from analysts.

The stock recently traded at $288.83, up 0.8%, and has climbed 23% in the last six months.

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J.P. Morgan analyst Mark Murphy lifted his target price to $310 from $300 and kept his rating on the stock at overweight.

“Microsoft delivered revenue growth 5 points ahead of consensus and robust commercial bookings growth,” he wrote in a commentary.

He cited six important takeaways:

1. “Azure revenue growth of 51% exceeds consensus by 9 points, and in constant currency it only decelerated by a point off of a good number last quarter.

2. “Commercial bookings outperform, despite headwinds of a smaller expiry base, growing 25% constant currency on strength in core sales and larger, longer Azure contracts.

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3. “Microsoft alleviates some fears around operating expenditures rehydration.

4. “LinkedIn reaches the $10 billion revenue milestone in FY21, joining Gaming and Security” in that rarefied air.

5. “A couple of areas that saw weakness, Windows OEM and Surface devices, were impacted by ongoing constraints in the supply chain.

6. “Microsoft headcount growth of 12% in FY21 suggests confidence in its outlook.”

Jefferies analyst Brent Thill maintained his buy rating on Microsoft and $335 target.

“MSFT reported a clean beat and even more impressive guide, which should sustain shares despite FY22 margin pressure,” he wrote.

“Security and Teams remain growth drivers with long runways ... and an acceleration in commercial remaining performance obligations growth ... ultimately supports sustainable double-digit revenue growth.” 

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