Macquarie analyst: Why I slashed my Apple target (video)

First Ben Schachter cut his Apple price target to $188 from $222. Then he went on CNBC.

My take: Schachter seems to get Apple. Not having seen his note, I still don’t understand why he think Services is heading for rough patch in 2019.

See also: Macquarie slashes Apple price target on fear of slowing Services

4 Comments

  1. Fred Stein said:
    Muddled ramble.

    If Services grows at 20%, that’s great. It may be a modest decline in growth rate, but not in growth dollars. No concern.

    Are there better growth stocks? Yes, and their forward P/E’s are higher than Apple’s. Meaningless questions and comparisons.

    Does Schachter have a model to support his $188 target? Does it factor in buybacks for this Q and rest of 2019? So far, he’s provided glib comments.

    4
    December 13, 2018
  2. Gregg Thurman said:
    While I disagree with his “12-month” price target of $188 (13 X ttm estimated earnings reported January 2020). Applying this quarter’s LOW multiple (13.7137) against what I believe Apple will report in January 2020 ($14.40 ttm) you get $197.xx.

    So far this period AAPL’s CLOSE ISM (aka PE) averages 15.52. Applying that multiple to JAN 2019 reported earnings arrives at a valuation of $200 by April (pre-earnings) 2019.

    At best Schachter’s price target is a 3-month target. I can accept that. I think the big disconnect between analyst price targets and ours is duration. An analyst describes their targets as one year when in reality they are only 3 months.

    I do think Schachter’s understanding of Apple’s business model is pretty sound, especially when he discusses installed base (economic life of iPhones/iPads).

    2
    December 13, 2018
    • Aaron Belich said:
      He’s still hung up about iPhone units though. He’s disregarding Apple Watch Series 4, which is nearly comparable with iPhone 4/4s in terms of market penetration and is about to go critical. Apple Watch will have a shorter average life span… and still needs an iPhone. We will likely see another bump up in screen sizes in the watch within three to five years similar to the 5 to iPhone Plus evolution. With that will likely come freedom and cannibalization of some iPhones, but offer longer average life span along with increasing revenue. DED helps make it so easy to see!

      1
      December 13, 2018

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