Merrill Lynch raises its Apple target $15 to $150

Analyst Wamsi Mohan is looking forward to a record December quarter — and a record March as well.

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

Demand for products strong; Ship times still extended  We expect Apple (AAPL) to report a record Dec qtr of almost $106bn in revenue, driven by strength across the portfolio and favorable FX. Despite the later launch of iPhones, demand for the higher end models remains robust creating a strong average selling price (ASP) uplift q/q. We also expect upside in Mac revenue, where we estimate that AAPL sold over 7mn units. We expect Services to grow 18% y/y (app store growth of 30%) and overall company gross margins of 38%. Despite the near term strength, we maintain Neutral as we view that positive estimate revisions are likely to peak by the March qtr and view risk reward as balanced.

March qtr benefits from supply constraints Given the delayed launch of the iPhones, we expect some of the strength of the new iPhone 12 (esp. Pro models) to persist into the March qtr driving 29% unit and 37% revenue growth. We expect overall March qtr revenue guide to beat consensus with upside driven from iPhones and easy compares in other categories.

Maintains Neutral rating, raises price target to $150 from $135.

My take: With the stock trading above $143, Mohan is playing catch-up.

CORRECTION: An early version of this story had a $3.36 trillion-dollar error in the headline.

10 Comments

    • David Emery said:
      Mebbe not! 🙂 That would be a very aggressive price target, unless AAPL got TSLA’s P/E or similar valuation….

      3
      January 26, 2021
  1. Alan Levy said:
    From PED’s fingers to God’s ears.

    2
    January 26, 2021
  2. Tommo_UK said:
    Quick.. crosspost to redditt before PED corrects 🙂

    6
    January 26, 2021
  3. Greg Lippert said:
    Poof….there goes my retirement 😉

    2
    January 26, 2021
  4. Michael Goldfeder said:
    @Greg: Perhaps the gentleman with the hedge fund that shorted GME (Game Stop) has some money left that he might want to lose shorting Apple before the earnings are released after the bell.

    6
    January 26, 2021
  5. Roger Schutte said:
    Let’s be clear here on Wamsi Mohan’s 4 recent notes on Apple.

    July 31, 2020 – Price Target increased $2.50 from 102.50 to 105.00 – Recommendation: BUY
    Aug 5, 2020 – Price target increased 12% ($12.50 from 105 to 117.50) – rating changed down to: NEUTRAL
    Jan 4, 2021 – Price target increased 15% ($17.50 from 117.50 to 135) – rating remains: NEUTRAL
    Jan 26, 2021 – Price target increased 11% ($15.00 from 135 to 150) – rating remains: NEUTRAL

    So, lets review:

    August 5th, just 5 days after putting out a BUY rating, he drops down to NEUTRAL but ups the price target. And then today on Jan 26th, about 3 weeks after raising his price target $17.50 on Jan 4th, he raises it again $15.00, But sticks with a rating of NEUTRAL.

    He tells people that this stock is going higher but don’t buy it. And he gets paid to do this!

    3
    January 26, 2021
  6. Jerry Doyle said:
    Regardless of Wamsi Mohan’s narrative & PT, he is correct on solid Q2 results to come. Even here, though, Wamsi and most others are underestimating & not observing the larger picture of continuing developing factors that will translate into what will be a historical Q2 quarterly Apple performance on par with what we see in Wednesday night’s performance. “Laissez le bon temps rouler!”

    1
    January 26, 2021
  7. bas flik said:
    microsoft leads the way.

    2
    January 26, 2021
    • Mark Visnic said:
      AMD as well, especially with respect to Mac revenues. The PC market is on .

      Notwithstanding, Cramer’s point on heightened expectations generally being a negative, analysts are confused. Guidance, if given, will be better than expected. AAPL is north of $150 soon.

      4
      January 26, 2021

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