MSFT
Microsoft Corporation
$372.97
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 20.4% below fair value
You pay
$372.97
Bear
$265.89
Fair
$468.81
Bull
$716.03
Bear
$265.89
-28.7%
11% stage 1 growth, 11% discount
Fair
$468.81
+25.7%
19% stage 1 growth, 11% discount
Bull
$716.03
+92.0%
24% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (19% base case)
Terminal Value % of EV
45%
Implied Market Multiple
36.5x
Market is pricing in (growth)
17.0%
vs 18.7% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $551.33 from 82 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $468.81 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions