UBS raises Apple price target

“We do think the P/E could rise over time as Apple is perceived more like Nike than like Nokia.” — UBS analyst Steve Milunovich

From CNBC (still waiting for the original note):

UBS raised its price target to $210 from $190 for Apple shares, representing 12 percent upside to Thursday’s close. The firm cited the premium nature of the company’s brand.

The firm’s consumer survey “results indicate weak iPhone buying intentions but a rising mix, so continued unit pressure but potential for a flat-to-up ASP [average selling price],” analyst Steven Milunovich said in a note to clients Friday. “Buying intent is down slightly across the world though the mix of iPhone X appears strong. The brand remains aspirational. … We do think the P/E could rise over time as Apple is perceived more like Nike than like Nokia.”

“Although the next big thing is not in sight, the consistency and optionality of the Apple franchise could improve the P/E over time,” he said. “We think the narrative is shifting from iPhone units to a consistent franchise with low single-digit hardware growth augmented by higher-margin, faster growing services.”

Maintains Buy rating, raises price target to $210 from $190.

My take: To think that Milunovich’s target in September 2016, less than two years ago, was $127.

6 Comments

  1. Gregg Thurman said:
    “but potential for a flat-to-up ASP [average selling price],””

    Somebody hasn’t been doing the math.

    iPhone ASP will continue to increase through FY2022 as lower cost LCD iPhones are flushed out of the iPhone lineup. By the end of FY2022, I’m looking for an iPhone ASP of ~$850.

    With minimal growth (~2.2%/annum) to 240 Million units in FY2022, iPhone revenue will grow (~13%/annum) to ~$204 Billion, up from FY2017’s $141 Billion.

    All without raising iPhone prices any further than current levels (assumes iPhone X Plus starts at $999 and iPhone X start price is reduced to $899).

    2
    June 1, 2018
    • Michael Thompson said:
      If your future revenue forecasts are even close to accurate, our stock is going much higher. What was your 1st Quarter 2019 estimate?

      0
      June 1, 2018
      • Gregg Thurman said:
        Last thing before going to sleep. I’m not in front of the computer so can only give you an approximate. In the morning I’ll give my exact estimates.

        Revenue $95 Billion
        EPS $4.xx

        0
        June 3, 2018
      • Gregg Thurman said:
        Michael, sorry I didn’t get back to you Saturday as promised (busy weekend).

        My revenue forecast for January 2019 is $95.177 Billion. EPS at $4.95. Revenue is up mostly on the back of iPhone unit and ASP increases. EPS is up (24% YoY) a lot due to the reduction in tax rate and share count.

        0
        June 4, 2018

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