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Is Microsoft In the Midst of Defying Gravity?

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Microsoft (MSFT) has been known for giving investors a lot to look forward to for the past few years. 

That hasn't exactly changed for the high-flying software giant worth $1 trillion. Microsoft reports earnings Thursday. Here are three things to know. 

Earnings Beat Likely

Microsoft has beaten earnings per share expectations for 8 of its last 8 quarters. Analysts are looking for the company to post EPS for the quarter of $1.19 on revenue of $32.77 billion. Stifel analyst Brad Reback wrote in a mid July note "Expect upside to our in line estimates of $1.20/$32.69B given expectations for a continued constructive IT spending environment, Commercial O365 average selling price/unit gains (+27%), Azure (+67%) and gaming momentum." 

The stock is up 35% year-to-date, but flat in the past month leading into the earnings. 

Azure Revenue Growth

Azure, one of Microsofts prized products, saw revenue growth of 77% in its quarter reported in April. Reback mentioned he's looking for 67% growth for the quarter. Look to see how well Microsoft sustains its Azure growth. 

Still a Buy?

The stock has been an enormous outperformer, but several points suggest it could still be a buy. The stock trades at 26 times forward one-year earnings, well below where that multiple has gotten in the past. Meanwhile, analysts are looking for strong growth of free cash flow for the next few years. 

The average analyst price target is $148, representing almost 10% upside from the current level. 

Charting Microsoft's Rise From the Early Days of Computers to Cloud Domination

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