J.P.Morgan raises its Apple price target by $6

Analyst Samik Chatterjee has turned “incrementally positive.”

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

We are now turning incrementally positive on the volume outlook for iPhone shipments in 2020, led by channel checks from our global supply chain and smartphone analysts, which suggest that Apple is likely to pull an additional lever in the form of a refresh of the legacy iPhone SE/iPhone 8 model to address a much more “value” category than it has been used to with its recent launches.

Importantly, the incrementally positive volume outlook for 2020 is likely to drive upgrades to consensus earnings expectations, in turn driving positive sentiment for the shares and marking a significant change from downward revisions to near-term earnings over the last few months from continued concerns around the impact of the US-China trade war/slowdown in China.

Our positive volume outlook for 2020 is driven by our current expectation for the launch of four iPhone models (1 in 1H20 and 3 in 2H20) and more significant spec upgrades. We are increasing our 2020 iPhone shipment outlook to 195 mn units ─ likely the high-end of the street estimates and materially better than buy-side expectations, which are primed for modest declines from the current run-rate of ~180 mn units. Our FY20 and FY21 EPS estimates rise to $13.00 and $15.30, respectively (vs. $12.85 and $15.10 prior).

Maintains Overweight rating and raises price target to $239 from $233.

Cue the price target history:

jp morgan raises apple 239

My take: That 12 month break in coverage—after Rod Hall left for Goldman Sachs and before Chatterjee took over—did wonders for J.P.Morgan’s attitude.

3 Comments

  1. David Emery said:

    $6 – is that a “move” or a “hiccup”? 🙂

    0
    July 8, 2019
  2. Gregg Thurman said:

    Gee whiz, his algorithms agree with my historical trend chart.

    “I see AAPL expanding based on historical trading patterns (eight-year average) following the summer (July 4 week) selloff. The historical trend shows AAPL expanding (on average) ~6.5% in the next 2 to 3 weeks, declining a bit just before earnings report then resuming its expansion another 6% post-earnings through to Labor Day week….
    …Am I saying AAPL will be trading at $224 by Labor Day week? No, I’m saying that given the channel AAPL has been trading in for the past several years, the probable elimination of the Sino/USA overhang, expected Services revenue growth with >2X margin rate over Apple’s core hardware business, and greater gross revenue stability and predictability, it is possible that market sentiment will drive AAPL to $224 by as early as Labor Day week (new iPhone launch), then declining slightly through to October earnings.”

    $224 by Labor Day week isn’t $239, but $239 matches historic trend by April earnings

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    July 8, 2019
  3. Aaron Belich said:

    Apple is firing on all cylinders. I’m excited for whatever the new watch will bring, but mostly because it reduces Series 4 and will put it and series 3 onto even more cost-conscience buyer’s wrists.

    Apple Arcade will be the hidden gem that with, fingers crossed, new Apple TV hardware, plus existing PS4/Xbox owner’s controllers will open up a whole new world of games to enjoy on our Apple TV’s. I was thinking of getting a Nintendo Switch, but may instead hold off now for the kids for Apple’s, likely, kid-friendly offerings.

    0
    July 9, 2019

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