“We recommend buying Apple,” Pacific Crest Securities’ analysts Andy Hargreaves and Evan Wingren write via Barron’s. “Our $123 price target on Apple (ticker: AAPL ) is based on 6.5 times enterprise value/earnings before interest, taxes, depreciation and amortization (EV/Ebitda), using our forward 12-month Ebitda estimate of $74 billion. We believe Apple’s strong hold on its user base will support sustained pricing power, which should help drive stable gross margins and strong cash flow.”
“We believe concerns about a potential lack of innovation in the iPhone 7 underestimate the extraordinary growth in the user base over the past two years, which is likely to drive increased replacement volume and overall iPhone unit growth in fiscal 2017, almost regardless of the hardware,” Hargreaves and Wingren write. “We estimate the number of people that own new iPhones grew by over 70 million during the iPhone 6 cycle.”
“These people will come into a normal upgrade window during the iPhone 7 cycle,” Hargreaves and Wingren write, “which should drive significant growth in upgrade volume and overall iPhone unit growth in fiscal 2017, almost regardless of hardware innovation.”
Read more in the full article here.
MacDailyNews Take: All of this blather about iPhone 7 “lacking innovation” is nothing more than echo chamber nonsense.