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
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.
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).
I’m sure CNBC loves him though, glibly perpetuating the narrative that captures eyeballs.
If he had any facts, he’s doing a fantastic job of concealing them.