Hey Morgan Stanley, what peer pressure on Apple?

Analyst Katy Huberty said “peer multiple compression” drove her Apple target down. If anything, Apple seems to be dragging the FAAMG down.

Apple has trailed Facebook, Amazon, Microsoft and Google this quarter in both share price…

apple morgan stanley peer pressure

and PE ratio:

apple morgan stanley peer pressure

My take: I would have thought Google, Amazon and Facebook, whose PE ratios grew by double digits over the past three months, would be feeling the peer pressure on their multiples.

12 Comments

  1. Robert Paul Leitao said:
    Grouping the “FAAMG” stocks into any kind of a peer group is an artificial construct. Apple remains in an equity class all its own. As far as the PE ratios are concerned, it’s only the “E” that matters. As long as Apple’s earnings are rising, the share price is likely to move higher. Yes. I expect earnings multiples in the broad market to trend lower by the end of the year. Apple can’t control the market’s multiple. The only component in the ratio Apple can influence is earnings. As long as Apple continues to be “Apple,” the share price will move higher over time. I’m not concerned with the earnings multiple. I am concerned about earnings. As long as earnings continue to rise, the share price will take care of itself.

    10
    April 7, 2021
  2. Robert Stack said:
    @PED: I don’t think you meant to post the same chart twice… 🙂

    1
    April 7, 2021
    • Alan Birnbaum said:
      One is share price & the other PE

      1
      April 7, 2021
      • Robert Stack said:
        Hmmm – he either quietly fixed it or I need to buy me a pair of readers! Ha!

        0
        April 8, 2021
  3. Jerry Doyle said:
    Ms. Huberty’s TP cut is about compression of price to earnings multiples in peers. Oddly, though, all this news gushes forth how Apple’s Services forecast is growing robustly to move the company’s revenue needle. Even Ms. Huberty raises her Services forecast on stronger licenses revenue so her response is to cut Apple’s TP from $164 to $156 (or $155)??? The Services forecast by multiple analysts is the part of the equation that gets the higher multiple and if Apple comes forth with those robust numbers we all anticipate then “voila!” That is what matters; not the price compression “if” there were a price compression; which there doesn’t seem to be anyway. The whole Huberty exercise is not only “questionable,” it is puzzling.

    4
    April 7, 2021
  4. Kirk DeBernardi said:
    For my money, this youth interest in Apple and its products is the best insurance policy for it’s future.

    2
    April 8, 2021

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