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MSFT – Market expectations are for improving Uniform ROA, but management may have concerns about Azure, their security business, and revenue growth

March 15, 2021

  • Microsoft Corporation (MSFT:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 27.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about Azure cloud capabilities, their security business, and revenue growth
  • Specifically, management may be overstating the capabilities of Azure, the focus on data governance among business leaders, and expansion opportunities for xCloud. In addition, they may have concerns about the sustainability of demand for their premium security offerings, the analytical capabilities of their threat intelligence, and the progress of the integration of Dynamics CRM to Teams. Furthermore, they may lack confidence in their ability to maintain their security business revenue growth, commercial bookings growth, and Dynamics 365 revenue growth