Report
Chris Hickey, CFA

Another strong, straightforward quarter

MSFT reported another strong quarter, with commercial bookings, cloud revenue and EPS all outperforming. This came despite FYQ2 being challenging in terms of the volume of multi-year deals up for renewal. FYQ3 guidance suggests upside to Street estimates while a lower tax rate should boost FY19 EPS by ~3%. The company continues to execute well, with its differentiated hybrid cloud proposition and Office 365 upselling potential set to drive ongoing strong growth for several years. We remain Neutral given a 25x FY19 PE and low 20s EV / FCF, but raise our price target to $97 given the ongoing re-rating in the sector.
Underlying
Microsoft Corporation

Microsoft is a technology company. The company develops and supports software, services, devices, and solutions. The company provides an array of services, including cloud-based solutions as well as solution support and consulting services. The company also delivers relevant online advertising. The company's products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; and video games. The company also designs, manufactures, and sells devices, including personal computers, tablets, gaming and entertainment consoles, other devices, and related accessories.

Provider
Atlantic Equities
Atlantic Equities

Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.

Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.

Analysts
Chris Hickey, CFA

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