Merrill Lynch: 10 reasons to be bullish on Apple

From a note to clients by analyst Wamsi Mohan that landed on my desktop Monday:

We upgrade Apple to Buy (post our downgrade on Nov 2, 2018), predicated on:

  1. Stability of supply chain order cuts and large reversal of inventory overhang in iPhones
  2. Gross profit dollars reversing from declines to growth in 2H19, which is correlated to the stock price
  3. Modest reacceleration in services (China gaming) including upcoming announcements
  4. Overshoot of negative estimate revisions particularly in F20/21,
  5. Growth across healthcare, wearables and increasing services penetration,
  6. Growing installed base of users that will refresh supporting 200mn iPhone average annual shipments with cyclicality around it
  7. Competitive products supporting a higher price umbrella around foldable and 5G phones,
  8. Highly loyal user base (Fig 20/21 show results of our global survey of 151,262 total respondents across U.S., U.K, China, and India), with low churn where demographic changes are in Apple’s favor,
  9. Strong FCF with potential for M&A, and capital return (support for the stock given the recent selloff and lowered relative weighting), and
  10. Valuation ex-cash attractive at 10x.

Upgrades to Buy from Neutral and raises price objective to $210 from $180.

Below: Fig. 21

ten reasons bullish merrill lynch

Click to enlarge.

My take: Adds some color to the CNBC report that sent Apple up 2.3% in early trading.


  1. Robert Paul Leitao said:

    In my view, Merrill was too quick to cut its price objective to $180 in November. It’s good to see Apple again rated as a Buy.

    March 11, 2019

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