Barclays acknowledges Apple's momentum, ups stock price target to $655

Posted:
in AAPL Investors edited May 2014
Recent gains made by Apple stock had placed the price target at Barclays underwater, but the investment firm responded on Wednesday with a newly increased target of $655 that it said shows "respect" for Apple's momentum headed into the second half of 2014.


The NASDAQ MarketSite TV studio, via Luiss Villa del Campo.


Analyst Ben A. Reitzes previously had a price target of $590 --?a number Apple blew past earlier this month following strong results from its second fiscal quarter of 2014. On Wednesday, Reitzes acknowledged that Apple didn't see a "widely expected" slump in earnings in the first half of the year, and that's put the iPhone maker in a good position for the back half of 2014.

The analyst noted that shares of AAPL are up about 17 percent since the company's last quarterly earnings report, versus gains of about 2 percent for the S&P 500. He doesn't think Apple's gains will stop until the mid-$600s as hype for new products builds.

Apple was up in Wednesday afternoon trading, on pace to set yet another new 52-week high. The company closed at its highest level in over a year on Tuesday as investors demonstrated excitement for next week's Worldwide Developers Conference, as well as a forthcoming 7-for-1 stock split.

In raising his price target on Wednesday, Reitzes cited a total of five "short-term catalysts" he sees driving current momentum for the company. Chief among them was surprisingly strong iPhone sales, thanks to popularity for Apple's handset in overseas markets.

Second, Reitzes noted that the higher iPhone mix led to improved gross margins, which came in at 39.3 percent --?ahead of Wall Street expectations of about 38 percent for the quarter. Third, the analyst said Apple's increased capital allocation plan, to which it added another $30 billion, is appealing to investors.




For his last two catalysts, Reitzes looked to the future: He said expectations for huge iPhone sales in the second half of 2014 continue to grow, particularly with demand for big-screen phones and rumors that Apple will follow the trend with two larger handset models.

Finally, the analyst highlighted that Apple executives were uncharacteristically eager to talk about iTunes monetization in the company's recent quarterly earnings conference call. That candidness apparently made investors hopeful that Apple could embrace what Reitzes referred to as a "broader payments system" where the company could receive recurring fees and boost iTunes revenue.

Even with an 11 percent increase from its previous price target, Barclays' $655 forecast for AAPL stock is still much lower than some others on Wall Street. The highest professional analyst price target tracked by AppleInsider comes from Brian White of Cantor Fitzgerald, who has held his projected Apple share price of $777 for some time. The next highest is Rob Cihra of Evercore partners, who increased his target to $700 last month.

With shares of AAPL trading above $625 Wednesday afternoon, other prominent analysts' targets have also found themselves underwater for the time being. They include Maynard Um of Wells Fargo ("valuation range" of $515 to $585), Charlie Wolf of Needham & Company ($590), Rod Hall of JP Morgan ($623), and Steven Milunovich of UBS ($625).
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Comments

  • Reply 1 of 21
    lkrupplkrupp Posts: 5,904member

    So analysts who were assuring us Apple was doomed only yesterday now have egg on their faces and are spinning like crazy to get on board with the ‘new’ reality? Does that about describe what ‘acknowledging Apple’s momentum’ is?

  • Reply 2 of 21
    ifij775ifij775 Posts: 470member
    I'm not sure why an analyst would raise guidance before anything concrete has been announced.
  • Reply 3 of 21
    pazuzupazuzu Posts: 1,728member
    How much of this is Beats related?
  • Reply 4 of 21
    mpantonempantone Posts: 1,337member

    Probably none.

  • Reply 5 of 21
    pazuzu wrote: »
    How much of this is Beats related?

    I'm guessing you get songs stuck in your head constantly, being forced to listen to them over, and over, and over...
  • Reply 6 of 21
    512ke512ke Posts: 763member

    I'm not willing to do the work to maintain it, but I wish AI had a running "scoreboard" of analysts' predictions.

     

    This guy was just dead wrong.

  • Reply 7 of 21
    sambirasambira Posts: 90member

    Ah to be an analyst.  Who said you had to be correct.  The price target goes underwater so just adjust it like nothing happened (except the stock keeps going up) and make believe the prior "prediction" was ridiculous in the first place.  And make millions in the meantime.

     

    I'm rethinking my career.

  • Reply 8 of 21
    pazuzupazuzu Posts: 1,728member
    I'm guessing you get songs stuck in your head constantly, being forced to listen to them over, and over, and over...

    Yes- Turn the Beat(s) Around.
  • Reply 9 of 21
    maccherrymaccherry Posts: 924member

    This is why they did it. 3 billion for a crappy headphone maker with a subscription music business whose music Beats don't even own. LOL!

    Beats is pure marketing from the ground up.

    But it all looks good to investors and that's what counts apparently. So the stock shoots up and Tim buys back the goddamn stock using the company's cash rather than that thing called the markets. Then again, who the hell in the markets would have that money? LOL!

  • Reply 10 of 21
    froodfrood Posts: 771member
    Quote:

    Originally Posted by lkrupp View Post

     

    So analysts who were assuring us Apple was doomed only yesterday now have egg on their faces and are spinning like crazy to get on board with the ‘new’ reality? Does that about describe what ‘acknowledging Apple’s momentum’ is?


     

    I don't see many analysts at all predicting Apple's doom.  Their job is to value the company, and it is not an easy thing.  If they value it upon current performance of flat revenue growth and flat to negative profit growth, ie Apple's actual performance, the current surge in stock price doesn't make much sense, and there is little in the 'numbers' to justify raising the valuation.

     

    Since future expected earnings are a big part of valuation as well, the 'momentum' is basically coming from a large swath of people expecting Apple's future products to change the current performance in a big positive direction.  Hopefully the 6 doesn't turn out to be the new 5.  It is a little self fulfilling though.  With the price going up on speculation, the analysts adjust their valuation up, which drives more investors to buy- which fulfills the prognostication, which drives shares and valuations even higher.  Rinse, lather, repeat.  At some point Apple has to report actual earnings.  Based on the mismatch between the speculated valuation and reality, the stock will either soar or tank depending on how well reality lines up with perception.

     

    I think there is going to be a lot of buzz on Apple between now and August/September.

  • Reply 11 of 21
    slurpyslurpy Posts: 4,984member
    **** all these analysts and banks. So @ $400, it was all SELL SELL SELL. Now that the stock is the highest it's been in more than a year, it's all BUY BUY BUY? Not a fucking shred of insight shese robotic sheep have. Luckily, I don't listen to these hacks and bought a shitload of shares @ $400, when there was a story everyday advising how of everyone needs to dump their Apple stock.
  • Reply 12 of 21
    hentaiboyhentaiboy Posts: 663member
    Quote:

    Originally Posted by Slurpy View Post



    Luckily, I don't listen to these hacks and bought a shitload of shares @ $400, when there was a story everyday advising how of everyone needs to dump their Apple stock.

    Good for you. Why don't you sell up and retire to the Bahamas?

  • Reply 13 of 21
    SpamSandwichSpamSandwich Posts: 29,074member
    512ke wrote: »
    I'm not willing to do the work to maintain it, but I wish AI had a running "scoreboard" of analysts' predictions.

    This guy was just dead wrong.

    That scorecard is already being kept by Phillip Elmer DeWitt.
  • Reply 14 of 21
    So the new target is a whole 3.3% over the stock's price as I type this!?

    And that's supposed to be a ONE YEAR price target?

    They should be embarrassed.

    When the stock split goes into effect a ten- to fifteen-dollar change in the stock price will mean something again, which is why it will be a good thing for investors. Professional analysts shouldn't be affected by the psychology of larger numbers, but for whatever reason, it seems they are.
  • Reply 15 of 21
    glennc777 wrote: »
    So the new target is a whole 3.3% over the stock's price as I type this!?

    And that's supposed to be a ONE YEAR price target?

    They should be embarrassed.

    When the stock split goes into effect a ten- to fifteen-dollar change in the stock price will mean something again, which is why it will be a good thing for investors. Professional analysts shouldn't be affected by the psychology of larger numbers, but for whatever reason, it seems they are.

    I owe my very status of living to APPL stock. I can't stress that enough. The fact that even a bad joke about Apple can send the stock into a tailspin has made me very happy.

    I know just enough about tech to be dangerous, but I've learned enough about the human psychic to be profitable on the stock market and I'm no where near as smart as Tim.

    I attribute Apple haters to the fact that losers absolutely hate comparing themselves to winners.
  • Reply 16 of 21
    SpamSandwichSpamSandwich Posts: 29,074member
    I owe my very status of living to APPL stock. I can't stress that enough. The fact that even a bad joke about Apple can send the stock into a tailspin has made me very happy.

    I know just enough about tech to be dangerous, but I've learned enough about the human psychic to be profitable on the stock market and I'm no where near as smart as Tim.

    I attribute Apple haters to the fact that losers absolutely hate comparing themselves to winners.

    So you're a day trader that loves to short AAPL?
  • Reply 17 of 21
    So you're a day trader that loves to short AAPL?

    I have never actually "shorted" any stock. Sorry to disappoint. I make more on betting with something I know is good. Swing trades set aside of course. I still owe it all to Apple for having what I do. I don't have more than I should mind you.

    Honestly, since Apple last hit $700, (Thank those for stop loss trades). I've played it right and I thank my lucky stars! :)
  • Reply 18 of 21
    SpamSandwichSpamSandwich Posts: 29,074member
    I have never actually "shorted" any stock. Sorry to disappoint. I make more on betting with something I know is good. Swing trades set aside of course. I still owe it all to Apple for having what I do. I don't have more than I should mind you.

    Honestly, since Apple last hit $700, (Thank those for stop loss trades). I've played it right and I thank my lucky stars! :)

    So you just buy on the dips.
  • Reply 19 of 21
    So you're a day trader that loves to short AAPL?

    I don't think you know what a "day trader" actually is. Apparently it has an Apple like misconception.

    I am kind of a day trader, but no I've never shorted any stock. Ever.
  • Reply 20 of 21
    So you just buy on the dips.

    I buy on big dips.

    In case of Apple, I held it.

    Also, telling how you buy and sell can ruin you. So I suppose that's the mark of a day trader. Until you get to the point where it doesn't matter anymore.
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