Apple price targets rise as analysts see more upside after 2019 rally

Ryan Vlastelica, Bloomberg News:

Apple Inc.’s price target was raised to $350 from $280 at Needham, which wrote that the iPhone maker had a number of tailwinds in 2020 that could help it extend last year’s strong rally…

Needham analyst Laura Martin wrote that Apple was on her conviction list for a second straight year, noting the company’s direct relationships with 900 million of “the wealthiest consumers in the world.”

Needham also touted the company’s transition toward a recurring-revenue business model, “which is driving multiple expansion,” as well as its compensation structure, “a hidden asset that drives valuation upside.”

JPMorgan analyst Samik Chatterjee sees “further upside for long-term investors” given a higher percentage of earnings derived from Apple’s services business, along with 5G iPhones expected later this year. Also on Monday, Bernstein raised its price target on Apple to $300 from $250

MacDailyNews Take: As Apple’s Services story becomes clear to the analysts and investors, perhaps AAPL will finally move toward being somewhat fairly valued for a change!

4 Comments

  1. That analyst from Goldman Sachs who says Apple is going to see 35% loss of value must be seeing something that many other analysts are missing.

    Apple’s Services is certainly doing well, but does it actually offset iPhone sales revenue losses. I would really like to get some idea whether it does or not. There are analysts who say Services revenue doesn’t add up to iPhone revenue losses. It’s very difficult to tell who knows what’s going on at Apple and who I should believe. That’s why I just wait for the earnings call and know for sure. These analysts who like to guess and make predictions are basically messing with potential investor’s heads.

    I’m somewhat doubtful as to whether Apple stock can make even half the gains in 2020 that it made in 2019. Two years in a row of gains for Apple is something I can’t quite imagine considering how unusual 2019 was in terms of share price gains. I’m just thinking Apple’s share price is going to be mostly flat this year as I’m not sure Wall Street is going to give Apple very much leeway. I see too many stock indicators that Apple is overvalued but I’m not sure what those indicators are based on. Historical value, maybe. Anyway, I’m not going to get carried away with talk about 5G super-cycles and such. I’d like to hear about how well sales are going for the new Mac Pro and if Apple will be able to move plenty of them in the $15,000 to $20,000 range.

    1. macnificentseven48: “That analyst from Goldman Sachs who says Apple is going to see 35% loss of value must be seeing something that many other analysts are missing.”

      That analyst is likely playing a cynical game of FUD with AAPL shareholders (see numerous MDN links over the years), so he or his clients can buy when the price drops and sell when it rebounds. In fact, you nailed it: “These analysts who like to guess and make predictions are basically messing with potential investor’s heads.”

      748: “I’m somewhat doubtful as to whether Apple stock can make even half the gains in 2020 that it made in 2019.”

      Half would be about 43%. AAPL’s only done 43% or better 6 out of the past 15 years. But holy cow, 43% is a pretty high bar. I’d be ecstatic if AAPL only did half of 43%. Even if AAPL only does half of half of 43%, that’s still a pretty good return! And AAPL has done that or better 10 out of the past 15 years (see chart below).

      748: “Two years in a row of gains for Apple is something I can’t quite imagine considering how unusual 2019 was in terms of share price gains.”

      You don’t have to imagine it. You can look at it. The numbers show that the exact thing you’re dubious about happens more often than not. Over the past 15 years, AAPL has been flat or negative just 4 times. 2008 was the worst, but that was the Great Recession, and everyone got whacked then. 2018 may have shaken your faith, but if you just did nothing and hung in there, look at how it recovered the following year. And bonus points for you if added shares during that discount period (which I hold out as an example of FUD. Analysts were mad at Apple because the company stopped breaking out iPhone sales, and so they fudded the stock price down. They hated it when they actually had to do their jobs and look at the company as a whole.)

      Date • Closing Price • +/-%
      12/31/19 • $293.65 • 85.95%
      12/31/18 • $157.74 • -8.43%
      12/29/17 • $169.23 • 45.70%
      12/30/16 • $115.82 • 9.94%
      12/31/15 • $105.26 • -3.72%
      12/31/14 • $110.38 • 39.69%
      12/31/13 • $80.15 • 2.18%
      12/31/12 • $76.02 • 29.41%
      12/30/11 • $57.86 • 22.89%
      12/31/10 • $46.08 • 50.72%
      12/31/09 • $30.10 • 132.21%
      12/31/08 • $12.19 • -56.19%
      12/31/07 • $28.30 • 136.37%
      12/29/06 • $12.12 • 13.50%
      12/30/05 • $10.27 • 127.18%

      748: I’m just thinking Apple’s share price is going to be mostly flat this year.”

      I’d take that bet. The historical odds are against it. (On the other hand, a war could thoroughly mess things up for everyone, not just Apple, just as the Great Recession did.)

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