Apple: Ahead of the Powder Keg

Another price target hike, this one to $155 from $135.

From a note to clients by Cowan analyst Timothy Arcuri that landed in my inbox Monday:

Mo’ Money, No Problems; iPhone Update Ahead of the Powder Keg

Field work for both near-term iPhone 7/7+ supply and early read on iPhone new model builds support our long-held view that Street ests remain WAY TOO LOW for C2H:17 and C2018 as an aging base (esp in China) forms a powder keg for this launch… We are raising our iPhone unit estimates for both Qs and continue to see ASP tailwinds w/mix shifting to the premium model…

Lastly, the sell side is now largely bullish but some investors are starting to question whether valuation is full. On a RELATIVE basis, AAPL is still at a much larger discount to the market even at the same absolute P/E today vs mid 2014. While we are not arguing for a ton of multiple expansion from here, we believe estimates are still way too low AND there is still probably a little juice left in the multiple.

Maintain Outperform, raise price target to $155 from $135.

Here’s Arcuri’s fever chart of Apple’s discount over time:

Click to enlarge. Not seeing? Try the website. 

See also: Analyst: Apple is a ‘powder keg’ set to explode

One Comment

  1. George Providakes said:

    The key element in analysts assessment of stock value, is not the value of the company, but rather the market popularity and herd (aside from a few contrarians) mentality of stock bidding.

    So this is bit more about betting and speculation not intrinsic value. In fact, analysts point out the discount (huge almost like a company going out of business) as not a big factor in their stock price projections, but rather the new bits and popular narratives that feed the news and rumors

    Other than Cook saying constantly we are staying on our coarse and strategy with same core values, and highlighting elements in Apple revenue there is not a lot changing.

    March 20, 2017

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