BMO’s Tim Long still expects Apple’s share price to be lower in 12 months than it is today.
From a note to clients that landed in my inbox Monday:
We are not making any changes to our iPhone unit estimates, although we see more likelihood of downside than upside given that recent supply chain data points have not been that encouraging. We remain on the sidelines on AAPL shares as we believe the upcoming products coming in September may not be enough to trigger an upgrade cycle.
We are roughly in line with consensus for the June quarter. We are meaningfully below for the September quarter, with most metrics lower. Despite potentially easier comparisons for the December quarter (last year the iPhone X came in the December quarter), we are modeling units to be down slightly year over year.
We are raising our target price on the shares of AAPL to $184 from $171 as we raise the target multiple to 14x from 13x our CY2019 EPS estimate of $13.14. As illustrated below [see Exhibit 2], AAPL traded nearly at parity with the S&P back in 2014 (end of August hit ~99%) as excitement for the first large screen iPhones (iPhone 6 and 6 Plus) was building. AAPL is currently trading at only an 8% discount to the S&P (down from 17% three months ago), while on a three- and five-year historical average, it has typically traded at a 23% and 20% discount, respectively. We believe the stock is trading at a premium relative valuation based primarily on the huge stock buyback program.
Click to enlarge.
Maintains Market Perform rating and raises price target to $184 from $171.
My take: With a one-point change in his target multiple, Long goes from the third most bearish analyst on my price-target spreadsheet to the seventh. But he’s still underwater. In other words, he’s telling his clients that Apple’s share price is likely to be lower in 12 months than it is today.