Deutsche Bank cuts Apple target $25 to $175

But the stock, stuck in the low $130s, has to grow by a third to get even there.

From Conner Smith's "Deutsche Bank Cuts Apple Stock Price Target on Consumer Spending Concerns" posted Tuesday by Barrons:

As Wall Street worries about how inflation might affect consumer spending, Deutsche Bank just cut its price target on Apple AAPL +0.45% stock.Analyst Sidney Ho lowered his price target on Apple (ticker: AAPL) to $175 from $200, though he maintained a Buy rating. His new price target still implies a roughly 33% upside from recent levels...

Ho wrote that though the stock has performed in line or better than most of its megacap peers, he thinks macro uncertainty could continue to weigh on investor sentiment. He trimmed Apple’s target multiple to 26 times forward earnings estimates, as he doesn’t see the stock returning to its five-year high of more than 30 times in the coming year.

Ho notes that though the company didn’t provide a formal June-quarter outlook when it reported results in April, its comments about supply-chain constraints, foreign-currency impacts, and impacts related to the Russian-Ukraine war suggested to him that revenue growth could come in the low-single digits. He estimates revenue growth of 3% year over year, compared with the consensus of 1% growth.

"Considering the macro environment (rising interest rates, slower consumer spending, and continued geopolitical uncertainties) in the past 1+ month, we do think risk to our estimate is to the downside, and we would not be surprised to hear more chatters about Apple cutting orders,” Ho wrote.

Maintains Buy rating, lowers target to $175 from $200.

My take: Watch out for falling targets in the weeks ahead.

7 Comments

  1. Michael Goldfeder said:
    Just another example of the “herd mentality” making chatter well after the macro events have already been in the news cycle for several months. With gas prices at record highs, I still see people driving like NASCAR Drivers on the road. Everywhere I look people are always scrolling on their iPhones and/or displaying an assortment of Apple wearables. Apple has negotiated these supply chain issues better than anyone would have anticipated, yet the gossip and noise is ongoing 24/7. In the meantime, buybacks are producing more value for long term shareholders, Including, but not limited to; Warren Buffet.

    Perhaps John Oliver can enlighten us as he seems quite knowledgable about the App Store, and probably everything else Apple related too.

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    June 14, 2022
  2. Fred Stein said:
    Upvoted Michael, and add..

    Everywhere I go, including recent travel, there are ‘we’re hiring’ signs. So inflation, yes, and no sign that it will go away soon*. Recession, maybe, heck if I know.

    *Residential real estate’s extreme upward climb will likely abate or reverse.

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    June 14, 2022
    • Michael Goldfeder said:
      @Fred: No doubt real estate can’t maintain the current: “Jack and the Beanstalk” rise that has been ongoing for the past few years with % rates moving up along with the Fed’s increases. One interesting parallel that I see though is Bitcoin becoming the equivalent of the “Dot.com bubble” of 2000. I never could understand the love for Cryptocurrency which seems to be more aligned with the dark web and criminal element. If that goes the way of the buffalo, which it certainly appears to be doing at the moment, then the stock market will come out of this turmoil in much better shape IMO.

      Unlike the precipitous fall in stocks like TDOC and DOCU that have no earnings, amongst others, a stock like Apple with $105 Billion in available FCF funds to purchase and retire stock will come roaring back like the “King of the Jungle Lion” that it is once these macro events abate. Which they will.

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      June 14, 2022
      • John Konopka said:
        Bitcoin and similar items seem more like Beanie Babies or Cabbage Patch Dolls. No real value but a huge fan appeal among a small base.

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        June 14, 2022
        • Michael Goldfeder said:
          @John: Or perhaps an even smaller base like those fans of the: “Pet Rock.”

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          June 14, 2022
        • Jeff Galanti said:
          I am enjoying watching Bitcoin and the other cryptos marching toward their intrinsic values of slightly below zero. Certainly, the technology of distributed ledgers has infinite useful applications but owners assigning value to digital currencies is folly. What would happen to the prices of oil, gold, etc. if software engineers could make a product with the exact same characteristics? They would go toward zero.

          I apologize for always going back to Buffett but he is the oracle for a reason. He often cites the example of comparing an investment in gold to an investment in productive assets, the S&P in his example. If someone had invested $10,000 in gold in 1942, the first year that he purchased stock, they would have had an asset worth $410,000 in his fairly recent reference year (1 or 2 years ago). That same $10,000 invested in the S&P, which is a collection of companies, most of which are producing products, services and presumably profits, would produce a market value of $51,000,000.

          That example seems bad enough. Now consider if the market could produce more gold with a few strings of code.

          It is a shame that so many will lose so much on crypto but it is destined to happen.

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          June 14, 2022
      • Fred Stein said:
        yes to everything, Michael

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        June 14, 2022

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