Buy or Sell? Jefferies hikes Apple price target to $260 from $210

From a note to clients snagged by MarketWatch:

Tim Cook’s company is under-appreciated says our call of the day from Jefferies analysts.

Equity analysts Kyle McNealy and George Notter have just come out with a recommendation for investors to buy Apple, and a target for shares to rise to $260. They say Wall Street fails to appreciate how much the company stands to benefit from fifth generation cellular network technology, which basically promises faster data connection for consumers.

“In our view, current expectations for Apple’s first 5G iPhone lineup are too low. They underestimate Apple’s competitive position for 5G devices,” they said…

They list a few reasons for their optimism: Most Apple customers will need a 5G upgraded device; the industry marketing push behind 5G will be huge with more product differentiation versus prior cycles; world-wide smartphone penetration will get higher and Apple has also expanded its own mid-range offerings.

To Buy rating from Neutral. Hikes price target to $260 from $210.

My take: Lots of changes at Jefferies. As near as I can tell, McNealy and Notter have taken over from Timothy O’Shea, who took over for Peter Misek a few years ago and left three months ago to watch the video game industry for Code Advisors. New analysts, new attitude.

I’ve asked for the note.

UPDATE: Got the note. See Why Jefferies flipped its Apple bit from Neutral to Buy

Below: Jefferies’ Chart 16

jefferies apple hikes 260

Click to enlarge.

2 Comments

  1. Fred Stein said:
    5G is overhyped near term and under hyped long term.In addition to iPhone upgrades:

    5G means a new generation of wearables, including, but not limited to Apple Watch.

    5G will drive cord cutting for both home phones and home video subscriptions. That alone removes concerns about the ROI of Apple’s current TV + promo bundling.

    5G iPads will also do very well.

    0
    September 24, 2019
  2. Robert Paul Leitao said:
    Sure. Most iPhone owners will need a 5G upgrade. But adoption of 5G will need the participation of iPhone owners to make the technology as commercially viable as possible. I expect heavy promotions by the carriers to drive upgrades to 5G iPhone handsets. Adoption of Apple’s services will also get a boost from faster connectivity.

    For those looking to upgrade their iPhone handset this year and have an interest in upgrading next year to a 5G iPhone, I recommended the iPhone Upgrade Program. It provides a 0% interest rate loan from Citizens Bank. Although the program requires the purchase of AppleCare (a smart decision anyway), the cost of Apple Care is pro-rated over the 24 months of the loan. If the buyer chooses to upgrade after 12 months to a new iPhone handset under the program, the second year of payments is settled with the trade-in of the iPhone. In other words, the buyer only pays for the 12 months of AppleCare coverage that is used. The buyer also has the option of keeping the iPhone for the 24 months of the contract. There’s no obligation to trade-in the iPhone after a year. But if one chooses to upgrade next year, the trade-in process is both easy and convenient.

    We are now moving to within 12 moths of the release of 5G iPhone handsets and the share price will increasingly reflect market expectations for record iPhone revenue from the 5G upgrade cycle.

    A price target of $260 is a good starting point for the new analysts covering the company.

    0
    September 24, 2019

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