An oldie, but a goodie. could it be? Steady Eddie. Somehow my twenties turned to the 50s. Somehow it was shocked that Dwight Gooden was younger than me, but the toast of the National League … turned into shocked when I could read anything at all without fumbling on my glasses. Throughout most of my career, since I went public in 1986, (another Gooden reference?) … it has been Microsoft (MSFT). Windows. Office. Still helpful, but the story continues. Outside.
Tonight's The Night
Microsoft will report the company's fiscal third quarter tonight, when the twin bells on 11 Wall Street and Times Square stop calling. The street looks for EPS on a dollar flat on revenues of $ 29.84 billion. If realized, this will be a year-on-year increase of 1
For me, a trader longs for this name, the focus must be on cloud computing as it is now has to be for the software industry entirely. Yes, recurring revenue products such as those already mentioned are valuable performance drivers. Yes, many are betting on games, but games have been balky this year. A stronger February has been followed by a weak return in March, a decline in sales across that industry. That said, Azure is how success will be measured for Microsoft. Azure will determine the path that the stock price will take forward. So let's focus on it.
Last week, KeyBanc analyst Brent Bracelin indicated that he sees Azure's subscription-based APR on top of the $ 12 billion, while seeing APR's $ 365 billion APR subscription. Similarly, UBS analyst Jennifer Swanson Lowe, according to Barron, believes that 2019 revenue for Microsoft, along with Abobe (ADBE), and Salesforce (CRM) topping broader industrial expectations. Then, last week, Keith Weiss of Morgan Stanley designated Microsoft as "best risk / reward software". So … the analyst community is convinced. Are we? It's more important. Analysts are fine, but unlike them, when we are wrong, we actually lose money.
I closely follow two things about the Microsoft cloud industry. One is just how fast Azure's hybrid cloud for business grows. How attractive are companies that find this offer to the chief competitor, the Amazon (AMZN) AWS service. It brings us to the pentagonal JEDI program. Last week, Microsoft revealed two data centers designed and created solely for classified information. Remember that Amazon has already been cleared to host secret data for both the CIA and DOD, while Microsoft is still waiting for such approval. DOD's JEDI program, which is what the military's cloud contract is known as, is worth $ 10 billion, and has won a win taking all kinds of playoffs. The last two competitors are Amazon and Microsoft, after IBM (IBM), and Oracle (ORCL) was eliminated and Alphabet (GOOGL) volunteered. We must hear comment on this.
Obviously there is much to be done here. Whether you rely on the Blue Pitchfork or the Orange Cup with Handle, both have been supportive through 2019, the outbreak of it will probably handle more so late. As you can easily see, Money Flow has been robust, while the daily MACD and Relative Strength are almost too robust. Maybe overbought.
As I have said, I like Microsoft. Having said that, we set aside my target price of $ 132. I wouldn't be surprised to see a crack in either direction after the call tonight. That said, the cloud is the future (along with 5G), and Microsoft is a dominant force in giving it the cloud over US business.
Target price: $ 132
Add: $ 112
Add: $ 112
Panic: $ 103
Note 1: I have enough exposure, but one deals interested but not willing to pay current prices, could target next earnings season with …..  – Seller a MSFT $ 115 July set (value: $ 1.73)
– Sells a MSFT $ 110 July set (value: $ 1.02)
Net debit: $ 2.75
Note 2: The deal here has received $ 275 in advance. In exchange, the trader has accepted the risk of buying 100 shares of MSFT for $ 115, and perhaps another 100 shares of MSFT for $ 110 in July. Worst case … Trader ends up with 200 shares of MSFT on a net basis of $ 111.13, with the shares trading below $ 110. The point is that the web base is below where I see the name as an addition.
(Microsoft, Salesforce, Amazon and Alphabet are holdings in Jim Cramers Action Alerts PLUS membership club. Do you want to be notified before Jim Cramer buys or sells MSFT, CRM, AMZN or GOOGL? Learn more now.]  Get an email notification every time I write a Real Money article. Click "+ Follow" next to my city line to this article.