Bank of Montreal raises Apple price target to $170

Apple is closing the valuation gap.

From a note to clients posted Tuesday by BMO analyst Tim Long:

Bottom line. The recent run in AAPL shares has closed some of the valuation gap with the market, but we believe there is a historical precedent for 10% of additional upside to the P/E multiple.

Precedent for higher multiple. AAPL shares are trading at approximately a 10% discount to the market, similar to the range at this point ahead of iPhone 6 in mid-2014. In that case, we saw the multiple completely close the gap by the time of the launch, and we believe we could see a similar movement this year.

EPS highly sensitive to unit upside. We believe if this year’s cycle could be half
as good as the iPhone 6 in terms of incremental units, it would mean an additional $0.50 of FY2018 EPS versus our model. Looking back at the iPhone 6 cycle, we found consensus estimates were 25% lower than actual results for the following fiscal year at this point in the cycle.

Reiterate Outperform, raise price target to $170 from $160.

Below: Tracking Apple’s discount to the market.

valuation gap

Click to enlarge. Not seeing? Try the website. 


  1. Robert Paul Leitao said:
    A 10% increase to the current p/e multiple increases the multiple to about 20 times trailing 12-month earnings. This does not factor either fast-rising net income in FY2018 or the diminishing fully diluted share count. I suspect the analyst will be raising his price target again by late summer.

    May 16, 2017
  2. Fred Stein said:
    The chart shows that most of the time, AAPL’s price trades between 10% and 30% discounted to what it should be worth.

    May 16, 2017

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