Microsoft named a new short idea at Hedgeye
Jean-Luc Ichard


Microsoft (NASDAQ:MSFT) was named a new short idea at Hedgeye with the potential for more than 20% downside.
"We see more than 20% downside risk for MSFT as the company enters the estimate discovery process," Hedgeye analyst Ami Joseph wrote in a note on Friday. "When growth slows, the appropriate valuation consideration will change as well."

Joseph argues that Microsoft (MSFT) is too expensive when comparing forward growth rates to its own dividend/yield growth history. He also said he believes the equity is too expensive when using software peer group growth to revenue.
Hedgeye's Joseph also talks about Street estimates for Azure's growth as well as competition from Amazon's (AMZN) AWS, which has been taking a "price decline stance," likely putting pressure on Microsoft (MSFT) to keep pace.
Hedgeye is hosting a presentation on its Microsoft (MSFT) short next Thursday.
Last month, Morgan Stanley said Microsoft has an attractive risk reward profile "not reflected in shares."