Microsoft: New All-Time High Before FY24 Results, Still A Buy

Company Update (MSFT US) (Buy): Shares have risen 35% in the past year; we review Microsoft’s position as one of our core holdings.

Highlights

• Microsoft is our top AI pick because of its platform status.

• Gains in the past year have been driven mostly by EPS growth.

• Accounting changes do not worry us; CapEx, however, is a concern.

• We are comfortable with shares being at 38.4x FY24 consensus EPS.

• At $454.70, we see 33% upside (10.1% p.a.) by June 2027. Buy.

Introduction

We review our Buy rating on Microsoft in anticipation of FY24 results to be released later this month.

We last published research on Microsoft last July, after FY23 results. Since then, shares have gained a further 35.5% (including dividends), taking the total gain since our first published Buy rating in December 2020 to 106.2%:

MSFT Share Price (Last 5 Years)

Source: Google Finance (11-Jul-24).

Microsoft has been a top-5 position in our “Select 15” model portfolio since its inception at the start of 2023, and a multi-bagger for us in real life after we have held the stock continuously for more than a decade.

We believe Microsoft shares remain attractive and they should remain a core holding in our portfolio.

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