Why Cowen says it slashed its Apple price target $25

Analyst Krish Sankar steps back from the second highest target on Wall Street.

From a note to clients that landed on my desktop Tuesday:

We came away upbeat that innovation remains strong at Apple as we believe the company remains in a transitional period of unifying its 3 major hardware platforms while focused on future Services and Subscription content growth. Project Catalyst was a key announcement. The DoJ’s newly announced jurisdiction for possible future probes could be an overhang for the stock…

We believe any anti-trust probes for Apple could center on its App Store (~5% of total sales) given the strong control that the company has over the app marketplace it operates, rather than a break-up of the company…

Given the newly announced DoJ jurisdiction over certain large technology companies that could include Apple and the recent SCOTUS ruling that allows the Apple vs. Pepper case to continue, we are lowering the Services multiple to account for these increased risks.

Maintains Outperform but lowers price target to $220 from $245. 

My take: A 10% cut seems out of proportion with the risk. Could it also be that Cowen found itself leaning too far over its skis? See chart below:

cowan slashes apple target 220Click to enlarge.

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