Microsoft ETFs To Watch On Surging Cloud Ahead Of Q3 Earnings

Microsoft (MSFT - Free Report) is set to release fiscal third-quarter 2020 results on Apr 29 after market close. Being the world's largest software maker, it is worth taking a look at the company’s fundamentals ahead of its results.

Over the past three months, the stock has gained 5.2% outperforming the industry, which has shed nearly 8%. The outperformance is expected to continue if the software leader beats estimates.

Inside Our Methodology

Microsoft has a Zacks Rank #3 (Hold) and an Earnings ESP of -0.81%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The stock saw negative earnings estimate revision of a couple of cents for the fiscal third quarter over the past 30 days. The Zacks Consensus Estimate indicates substantial earnings growth of 11.4% from the year-ago quarter. Microsoft projects substantial year-over-year revenue growth of 10.7%. Its earnings track is impressive, with the last four-quarter positive earnings surprise being 13%, on average. The stock boasts a solid Growth Score of B and belongs to a top-ranked Zacks industry (top 17%).

Microsoft Corporation Price, Consensus and EPS Surprise

Microsoft Corporation Price, Consensus and EPS Surprise

Microsoft Corporation price-consensus-eps-surprise-chart | Microsoft Corporation Quote

The Zacks Consensus Estimate for average target price is $188.73 with nearly 96% of the analysts having a Strong Buy or a Buy rating ahead of earnings. This represents nearly 8.4% upside from the current price.

What to Watch?

Investors will closely monitor cloud-computing sales as the COVID-19 pandemic has resulted in a dramatic surge in demand for such services. Microsoft announced that usage of Skype rose 70% in March and that the platform now has 40 million daily active users. In particular, it saw a whopping 775% increase in the use of its cloud services in areas with social distancing or shelter-in-place orders.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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