BMO raises Apple price target to $160 from $142

From a note to clients by BMO analyst Tim Long that landed in my inbox overnight:

New models driving higher ASP. We believe Apple, which already commands
the highest selling prices in the industry, will introduce a higher-priced model (or potentially two) in September alongside the standard iterative refresh to iPhone 7…

  • Entry – iPhone SE, priced $399-$499
  • Last-Gen – iPhone 7/7 Plus, priced $549-$769
  • Current-Gen – iPhone 7S/7S Plus, priced $649-$969
  • Premium – iPhone 7 Pro (aka iPhone 8), priced $969-$1,069

Biggest refresh cycle since iPhone 6. We expect some cannibalization of both regular and large-screen models but still model 11 million of net incremental unit growth in the first 12 months, which would make the upcoming cycle the most successful refresh cycle since iPhone 6 was launched in 2014.

Valuation remains attractive. As the largest publicly traded company, Apple is continuing the decade-long trend of the biggest player trading at a discount to the market. However, AAPL shares have been particularly discounted lately, and we base our price target on a reversion to the 10-year mean.

Reiterate Outperform, raise price target to $160 from $142. 

4 Comments

  1. Ken Cheng said:
    Just looking at the chart of BMO’s price targets and actual prices, you see how the targets are trailing indicators. As the price rises and exceeds targets, the target gets raised, simple enough; until one day the price starts falling, then the targets drop slowly, and the gap between target and price widens. Hardly very predictive.

    0
    February 24, 2017

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