Xbox Market Share to Boost Microsoft Stock

Trefis price estimate for Microsoft stock is $28, about 9% above the current market price of around $25.
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Microsoft's (MSFT) - Get Report Xbox competes with Sony's (SNE) - Get Report PlayStation and Nintendo's DS and Wii in the video gaming console market. We currently have a Trefis price estimate of around $28 for Microsoft's stock, about 9% above the current market price of around $25.

Trefis members have created forecasts for two key drivers of Microsoft's stock over the last week: (1) Xbox Market Share in Gaming Console Market and (2) Xbox and Other Entertainment Operating Margin. The members' forecasts suggest that Xbox Market Share in Gaming Console Market and Xbox and Other Entertainment Operating Margin will trend above the Trefis estimate. These projections indicate a combined upside of around 1-2% for Microsoft's stock.

We estimate that Xbox and Zune constitute around 1% of the $28 Trefis price estimate for Microsoft's stock. Below are charts showing recent estimates created by Trefis members for the two drivers: (1) Xbox Market Share in Gaming Console Market and (2) Xbox and Other Entertainment Operating Margin.

1. Xbox Market Share in Gaming Console Market

The average of forecasts for Xbox Market Share in Gaming Console Market created by Trefis members indicated a projected increase from around 12% in 2010 to around 17% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 10% in 2010 to 13% by the end of the Trefis forecast period. The member estimates imply a small upside to the Trefis price estimate for Microsoft's stock. In the past, Xbox Market Share in Gaming Console Market has increased from around 8% in 2007 to around 11% in 2009.

Disagree? You can drag the forecast trendline above to express your own view, and see the sensitivity of Microsoft's stock to Xbox Market Share in Gaming Console Market.

Our

complete analysis for Xbox Market Share in Gaming Console Market is here.

2. Xbox and Other Entertainment Operating Margin

The average of forecasts for Xbox and Other Entertainment Operating Margin created by Trefis members indicated a projected increase from 12% in 2010 to close to 33% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from around 7% in 2010 to around 29% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Microsoft's stock. In the past, Xbox and Other Entertainment Operating Margin has increased from around -19% in 2006 to around 7% in 2009.

Disagree? You can drag the forecast trendline above to express your own view, and see the sensitivity of Microsoft's stock to Xbox and Other Entertainment Operating Margin.

Our

complete analysis for Microsoft's stock is here.

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