josephcarlson
patreon
Microsoft Valuation (updated)
🕑 Added 2021-11-01 16:00:10 +0000 UTCHey everyone,
In my valuation on Microsoft I posted in September I had a price target of $350. You can find the post here: https://www.patreon.com/posts/56512710
Well, at the time that I made that valuation Microsoft was trading in the $280s and now it's trading at $331. The company has also reported earnings a few days ago.
In terms of earnings reports, Microsoft's was really good. They beat earnings by over 9%. Microsoft Azure grew by 50% YoY, and revenue overall grew by 22%. They also do not face any of the supply chain issues or labor market issues that many other big companies are facing. The margins of the business are actually expanding, not contracting.
My previous $350 price target was based on a 35 PE multiple (it currently trades at a 36) and analysts expecting $10.06 of earnings in 2023. Well after this latest report analyst consensus has moved upwards and they are not expecting $10.37 of earnings in 2023. This means that at the same PE ratio of 35, the new price target would be $363.
I'm going to adjust my price target accordingly to $362 from $350. I'm personally not planning on doing any more buys in the near-term in Microsoft unless it comes down in price, as I have made it an already large position. But I still think there's upside room in the near future for this stock and it will prove to be a very good long-term hold.
Comments
Mike
He probably has auto-invest turned off. You donβt *have* to stick with a set allocation on M1, though that is kind of what the platform is based on.
Adam
Thanks for the update. Sorry I'm a new member and not sure if this has been covered already. When you say you're not currently buying, what does that mean when using M1? Since everything is invested automatically, wouldn't you always be buying?
Cory Steffen
Thanks for the update Joseph! It's an interesting time we live in with the big players like Microsoft, Amazon, Google, Apple, etc. all dominating their respective markets. Sometimes it's hard for me to fathom them getting even bigger and growing their market cap even further but it's also hard to imagine a world where their dominance slips away.
