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2021-09-15
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Microsoft Still Has Some Upside
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":882541262,"tweetId":"882541262","gmtCreate":1631711406356,"gmtModify":1631891570592,"author":{"id":3559696317030368,"idStr":"3559696317030368","authorId":3559696317030368,"authorIdStr":"3559696317030368","name":"ALVH","avatar":"https://static.tigerbbs.com/e51a74fe0719fc4f9e10b19fb4e6e8e9","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":6,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Good</p></body></html>","htmlText":"<html><head></head><body><p>Good</p></body></html>","text":"Good","highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":2,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/882541262","repostId":1197984444,"repostType":4,"repost":{"id":"1197984444","pubTimestamp":1631710719,"share":"https://www.laohu8.com/m/news/1197984444?lang=&edition=full","pubTime":"2021-09-15 20:58","market":"us","language":"en","title":"Microsoft Still Has Some Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1197984444","media":"Seeking Alpha","summary":"Summary\n\nMicrosoft shares have risen 34% YTD.\nThe quarterly earnings in 2021 have been impressive.\nT","content":"<p><b>Summary</b></p>\n<ul>\n <li>Microsoft shares have risen 34% YTD.</li>\n <li>The quarterly earnings in 2021 have been impressive.</li>\n <li>The Wall Street consensus outlook is bullish, with about 10% projected 12-month appreciation.</li>\n <li>The market-implied outlook derived from options prices is also bullish and has improved since earlier in the year.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/78cf4b56323a37eacd27b73ced593338\" tg-width=\"1536\" tg-height=\"1082\" width=\"100%\" height=\"auto\"><span>Jean-Luc Ichard/iStock Editorial via Getty Images</span></p>\n<p>When I last analyzed MSFT in January, the forward P/E was 32.09. Since then, the share price has risen by 40.8% but the forward P/E has risen to only 33.78. This shows that the earnings outlook has increased rapidly over the past 8 months.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/94be6f98aba794a1bcfb9f368d01f348\" tg-width=\"1280\" tg-height=\"404\" width=\"100%\" height=\"auto\"><span>12-month price history and basic statistics for MSFT (Source: Seeking Alpha)</span></p>\n<p>MSFT has beaten expectations in each of the three quarterly earnings reports since my last analysis. The FY Q2 earnings reported on January 26, 2021, were something of a blowout, beating expectations by 23.6%. The earnings beats in the FY Q3 and FY Q4 were lower, but still substantial, at +14.1% and 13.26%, respectively.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a6550f32abfbdb3d5fecebfb12e1af6b\" tg-width=\"1280\" tg-height=\"412\" width=\"100%\" height=\"auto\"><span>Historical quarterly EPS and estimates for future quarters. Green values are the amount by which EPS exceeded the consensus expected value (Source: eTrade)</span></p>\n<p>Not least due to Microsoft’s substantial EPS out-performance in recent quarters, the market is reevaluating the growth potential of the firm, and the Intelligent Cloud segment in particular. Azure, the part of Intelligent Cloud that competes with Amazon Web Services, has increased revenue by 51% YoY. The outlook for MSFT’s share value has increased apace. On December 30, 2020, the consensus 12-month price target for MSFT was $244, as compared to $332 today.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/698c75c2b357c7ebafdd9f856a27efb5\" tg-width=\"1280\" tg-height=\"491\" width=\"100%\" height=\"auto\"><span>1-Year history for the Wall Street analyst consensus 12-month price target for MSFT (Source: Seeking Alpha)</span></p>\n<p>When I wrote about MSFT in mid-January, the Wall Street analyst consensus was bullish, with a 12-month price target that was 16.3% above the share price at the time. The 40.8% gain since then has dwarfed expectations. At the time, I calculated the market-implied outlook to June 2021. This is a probabilistic price return outlook derived using the prices of call and put options at a range of strike prices.</p>\n<p>The price of an option represents the market’s consensus opinion as to the probability that the share prices will rise above (call option) or fall below (put option) a specific level (the strike price) between now and the option expiration. The market-implied outlook is the probability distribution of price returns over this period that best reconciles the prices of options. The market-implied outlook represents the consensus of the options market.</p>\n<p>The market-implied outlook for MSFT in early January was slightly bearish, with elevated probabilities of negative returns relative to positive returns of the same size. In balancing the bullish analyst consensus with the slightly bearish market-implied outlook, I gave MSFT a neutral rating. The subsequent earnings, growth in expected earnings, and the resulting share price gains have made that conclusion look poor.</p>\n<p>In this post, I am revisiting the comparison of the Wall Street analyst consensus and the market-implied outlook.</p>\n<p><b>Wall Street Consensus Outlook</b></p>\n<p>eTrade’s calculation of the Wall Street consensus is derived using the views of 22 ranked analysts who have published opinions in the past 90 days. The consensus rating is bullish and the consensus 12-month price target is 10.6% above the current share price.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7a545a660ac3c85b1442baa7f03ce2b\" tg-width=\"1280\" tg-height=\"862\" width=\"100%\" height=\"auto\"><span>Wall Street analyst consensus rating and 12-month price target for MSFT (Source: eTrade)</span></p>\n<p>Seeking Alpha derives the Wall Street consensus from the views of 36 analysts who have published their opinions in the past 90 days. The consensus rating is very bullish and the consensus price target is 10.7% above the current price, effectively identical to the value from eTrade.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/169ff7cda22427af39519d1b375acc89\" tg-width=\"1280\" tg-height=\"641\" width=\"100%\" height=\"auto\"><span>Wall Street analyst consensus rating and price target for MSFT (Source: Seeking Alpha)</span></p>\n<p>Back in January, the consensus 12-month price target implied a 15.6% gain, as compared to the current outlook’s 10.65% expected 12-month gain. The consensus rating was bullish in January and continues to be bullish today.</p>\n<p><b>Market-Implied Outlook</b></p>\n<p>I have analyzed MSFT call and put option prices at a range of strikes, all expiring on January 21, 2022, to generate the market-implied outlook for the next 4.2 months (from now until that expiration date). I have also analyzed options expiring on June 17, 2022, to generate the market-implied outlook for the next 9.1 months. There is a very active and liquid options market for MSFT.</p>\n<p>The standard presentation for the market-implied outlook is a probability distribution of price return, with probability on the vertical axis and return on the horizontal axis.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/aa9a7d05b27c101e63fd6d9bdff6f731\" tg-width=\"618\" tg-height=\"356\" width=\"100%\" height=\"auto\"><span>Market-implied price return probabilities for MSFT for the 4.2-month period from today until January 21, 2022 (Source: author’s calculations using options quotes from eTrade)</span></p>\n<p>The market-implied outlook for MSFT is generally symmetric for the 4.3-month period to January 21, 2022, although the peak probability corresponds to a price return of +4.3%, so the outlook is slightly tilted towards positive returns, a bullish indicator. The market-implied outlook indicates a 54% probability of having a price return greater than or equal to zero over the next 4.3 months. The annualized volatility derived from this distribution is 26.5%.</p>\n<p>To make it easier to directly compare the probabilities of positive and negative returns, I look at a version of the market-implied outlook with the negative return side of the distribution rotated about the vertical axis (see chart below).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0bf2c61ae7a7268276d56734fb9a78d7\" tg-width=\"573\" tg-height=\"356\" width=\"100%\" height=\"auto\"><span>Market-implied price return probabilities for MSFT for the 4.2-month period from today until January 21, 2022. The negative return side of the distribution has been rotated about the vertical axis (Source: author’s calculations using options quotes from eTrade)</span></p>\n<p>This view shows that the probability of positive returns is consistently higher than for negative returns of the same magnitude (the solid blue line is above the solid blue line over a range of the highest probability outcomes). This is a bullish indicator. In theory, we expect that the market-implied outlook will be negatively biased due to risk-averse investors paying more than fair value for put options. In addition, dividend-paying stocks tend to have additional negative tilt because the dividends reduce the potential upside of a stock relative to the downside. The dividend for MSFT is so small that this second factor is not a big deal. Especially considering the potential for negative bias due to risk aversion, this market-implied outlook is quite bullish.</p>\n<p>The market-implied outlook for the next 9.1 months, calculated from options expiring on June 17, 2022, is closer to a neutral view, but retains a slight bullish tilt. The probability of positive returns is higher than for negative returns over much of the distribution, although the peak probability corresponds to a price return of -1.4%. The annualized volatility derived from this distribution is 28.4%.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/02db573563ef479e6b3ffba096d20cca\" tg-width=\"573\" tg-height=\"356\" width=\"100%\" height=\"auto\"><span>Market-implied price return probabilities for MSFT for the 9.1-month period from today until June 18, 2022. The negative return side of the distribution has been rotated about the vertical axis (Source: Author’s calculations using options quotes from eTrade)</span></p>\n<p>The market-implied outlook is bullish through early 2022, shifting to a more neutral outlook by the middle of next year. The market-implied outlook is still slightly bullish for the 9.1-month outlook to mid-June. It is also notable that there is no evidence of elevated probabilities of large negative returns (no volatility smirk), which is encouraging.</p>\n<p><b>Summary</b></p>\n<p>At this point in the market cycle, with MSFT having risen so much, it is hard to be bullish. On the other hand, both the consensus outlook from Wall Street and the market-implied outlook are bullish and the projected volatility (derived from the market-implied outlook) is moderate. The Wall Street consensus 12-month price target implies a 10.65% gain for the next year. Adding the dividend, the expected total return is 11.4%. This is not much return, relative to the 26.5%-28.4% annualized volatility from the market-implied outlook.</p>\n<p>Look for an expected 12-month return that is at least ½ the projected volatility and MSFT falls short on this basis. Given the bullish outlook from the market-implied outlook, combined with the persistent under-estimates of EPS growth by the analysts, I am persuaded to shift my view from neutral to bullish.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Microsoft Still Has Some Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMicrosoft Still Has Some Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-09-15 20:58 GMT+8 <a href=https://seekingalpha.com/article/4455304-microsoft-stock-still-has-some-upside><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nMicrosoft shares have risen 34% YTD.\nThe quarterly earnings in 2021 have been impressive.\nThe Wall Street consensus outlook is bullish, with about 10% projected 12-month appreciation.\nThe ...</p>\n\n<a href=\"https://seekingalpha.com/article/4455304-microsoft-stock-still-has-some-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软"},"source_url":"https://seekingalpha.com/article/4455304-microsoft-stock-still-has-some-upside","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1197984444","content_text":"Summary\n\nMicrosoft shares have risen 34% YTD.\nThe quarterly earnings in 2021 have been impressive.\nThe Wall Street consensus outlook is bullish, with about 10% projected 12-month appreciation.\nThe market-implied outlook derived from options prices is also bullish and has improved since earlier in the year.\n\nJean-Luc Ichard/iStock Editorial via Getty Images\nWhen I last analyzed MSFT in January, the forward P/E was 32.09. Since then, the share price has risen by 40.8% but the forward P/E has risen to only 33.78. This shows that the earnings outlook has increased rapidly over the past 8 months.\n12-month price history and basic statistics for MSFT (Source: Seeking Alpha)\nMSFT has beaten expectations in each of the three quarterly earnings reports since my last analysis. The FY Q2 earnings reported on January 26, 2021, were something of a blowout, beating expectations by 23.6%. The earnings beats in the FY Q3 and FY Q4 were lower, but still substantial, at +14.1% and 13.26%, respectively.\nHistorical quarterly EPS and estimates for future quarters. Green values are the amount by which EPS exceeded the consensus expected value (Source: eTrade)\nNot least due to Microsoft’s substantial EPS out-performance in recent quarters, the market is reevaluating the growth potential of the firm, and the Intelligent Cloud segment in particular. Azure, the part of Intelligent Cloud that competes with Amazon Web Services, has increased revenue by 51% YoY. The outlook for MSFT’s share value has increased apace. On December 30, 2020, the consensus 12-month price target for MSFT was $244, as compared to $332 today.\n1-Year history for the Wall Street analyst consensus 12-month price target for MSFT (Source: Seeking Alpha)\nWhen I wrote about MSFT in mid-January, the Wall Street analyst consensus was bullish, with a 12-month price target that was 16.3% above the share price at the time. The 40.8% gain since then has dwarfed expectations. At the time, I calculated the market-implied outlook to June 2021. This is a probabilistic price return outlook derived using the prices of call and put options at a range of strike prices.\nThe price of an option represents the market’s consensus opinion as to the probability that the share prices will rise above (call option) or fall below (put option) a specific level (the strike price) between now and the option expiration. The market-implied outlook is the probability distribution of price returns over this period that best reconciles the prices of options. The market-implied outlook represents the consensus of the options market.\nThe market-implied outlook for MSFT in early January was slightly bearish, with elevated probabilities of negative returns relative to positive returns of the same size. In balancing the bullish analyst consensus with the slightly bearish market-implied outlook, I gave MSFT a neutral rating. The subsequent earnings, growth in expected earnings, and the resulting share price gains have made that conclusion look poor.\nIn this post, I am revisiting the comparison of the Wall Street analyst consensus and the market-implied outlook.\nWall Street Consensus Outlook\neTrade’s calculation of the Wall Street consensus is derived using the views of 22 ranked analysts who have published opinions in the past 90 days. The consensus rating is bullish and the consensus 12-month price target is 10.6% above the current share price.\nWall Street analyst consensus rating and 12-month price target for MSFT (Source: eTrade)\nSeeking Alpha derives the Wall Street consensus from the views of 36 analysts who have published their opinions in the past 90 days. The consensus rating is very bullish and the consensus price target is 10.7% above the current price, effectively identical to the value from eTrade.\nWall Street analyst consensus rating and price target for MSFT (Source: Seeking Alpha)\nBack in January, the consensus 12-month price target implied a 15.6% gain, as compared to the current outlook’s 10.65% expected 12-month gain. The consensus rating was bullish in January and continues to be bullish today.\nMarket-Implied Outlook\nI have analyzed MSFT call and put option prices at a range of strikes, all expiring on January 21, 2022, to generate the market-implied outlook for the next 4.2 months (from now until that expiration date). I have also analyzed options expiring on June 17, 2022, to generate the market-implied outlook for the next 9.1 months. There is a very active and liquid options market for MSFT.\nThe standard presentation for the market-implied outlook is a probability distribution of price return, with probability on the vertical axis and return on the horizontal axis.\nMarket-implied price return probabilities for MSFT for the 4.2-month period from today until January 21, 2022 (Source: author’s calculations using options quotes from eTrade)\nThe market-implied outlook for MSFT is generally symmetric for the 4.3-month period to January 21, 2022, although the peak probability corresponds to a price return of +4.3%, so the outlook is slightly tilted towards positive returns, a bullish indicator. The market-implied outlook indicates a 54% probability of having a price return greater than or equal to zero over the next 4.3 months. The annualized volatility derived from this distribution is 26.5%.\nTo make it easier to directly compare the probabilities of positive and negative returns, I look at a version of the market-implied outlook with the negative return side of the distribution rotated about the vertical axis (see chart below).\nMarket-implied price return probabilities for MSFT for the 4.2-month period from today until January 21, 2022. The negative return side of the distribution has been rotated about the vertical axis (Source: author’s calculations using options quotes from eTrade)\nThis view shows that the probability of positive returns is consistently higher than for negative returns of the same magnitude (the solid blue line is above the solid blue line over a range of the highest probability outcomes). This is a bullish indicator. In theory, we expect that the market-implied outlook will be negatively biased due to risk-averse investors paying more than fair value for put options. In addition, dividend-paying stocks tend to have additional negative tilt because the dividends reduce the potential upside of a stock relative to the downside. The dividend for MSFT is so small that this second factor is not a big deal. Especially considering the potential for negative bias due to risk aversion, this market-implied outlook is quite bullish.\nThe market-implied outlook for the next 9.1 months, calculated from options expiring on June 17, 2022, is closer to a neutral view, but retains a slight bullish tilt. The probability of positive returns is higher than for negative returns over much of the distribution, although the peak probability corresponds to a price return of -1.4%. The annualized volatility derived from this distribution is 28.4%.\nMarket-implied price return probabilities for MSFT for the 9.1-month period from today until June 18, 2022. The negative return side of the distribution has been rotated about the vertical axis (Source: Author’s calculations using options quotes from eTrade)\nThe market-implied outlook is bullish through early 2022, shifting to a more neutral outlook by the middle of next year. The market-implied outlook is still slightly bullish for the 9.1-month outlook to mid-June. It is also notable that there is no evidence of elevated probabilities of large negative returns (no volatility smirk), which is encouraging.\nSummary\nAt this point in the market cycle, with MSFT having risen so much, it is hard to be bullish. On the other hand, both the consensus outlook from Wall Street and the market-implied outlook are bullish and the projected volatility (derived from the market-implied outlook) is moderate. The Wall Street consensus 12-month price target implies a 10.65% gain for the next year. Adding the dividend, the expected total return is 11.4%. This is not much return, relative to the 26.5%-28.4% annualized volatility from the market-implied outlook.\nLook for an expected 12-month return that is at least ½ the projected volatility and MSFT falls short on this basis. Given the bullish outlook from the market-implied outlook, combined with the persistent under-estimates of EPS growth by the analysts, I am persuaded to shift my view from neutral to bullish.","news_type":1},"isVote":1,"tweetType":1,"viewCount":115,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/882541262"}
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