Good End to Fiscal Year for Microsoft
We reiterate our fair value estimate and wide economic moat rating for the firm.
Microsoft (MSFT) reported a good end to the fiscal year with the company reporting strong constant currency growth across all three key business segments (includes productivity and business processes, intelligent cloud, and more personal computing). We continue to see healthy demand for Microsoft's Office 365, Dynamics 365, and LinkedIn offerings, while the shifting IT infrastructure and consumption preferences of enterprises is expected to spur strong ongoing growth for the firm's server and cloud-based products and services. Notably, we see Azure as having carved out a position as a global public cloud leader, which will help drive the Azure segment into Microsoft's largest business over the next 10 years. With our rosy long-term outlook unchanged after the quarter and full-year, we reiterate our $122 fair value estimate and wide economic moat rating. With shares up in after-hours trade and approaching 3-star territory, for potential investors, we see only a modest margin of safety in the name.
For the quarter, revenue rose 17% year over year to $30.1 billion (increased 15% in constant currency). In constant currency, the firm's commercial cloud revenue surged 50% year over year to $6.9 billion and was led by strong growth in Office 365, Dynamics 365, and Azure. Microsoft's management team noted that they were seeing optimistic corporate IT spending and increasing demand for cloud services.
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Andrew Lange does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.