UBS increases Apple price target to $115, sees gross margins improving in 2015

Posted:
in AAPL Investors edited July 2014
UBS this week was the latest investment firm to increase its price target for shares of Apple, with a new projection of $115 ahead of this afternoon's June quarter earnings report.




Analyst Steven Milunovich sees upside to Apple's gross margins both immediate-term and heading into 2015. For example, he cited recent data from Consumer Intelligence Research Partners which showed the high-end iPhone 5s taking a greater share of overall handset sales than the iPhone 5 did a year ago.

The data also suggests that customers bought higher capacity iPhones in the June quarter -- a period where customers are typically looking to save money with less storage.

And finally, Milunovich noted that consumers have been embracing the full-size iPad Air, which starts at $499, which reverses a trend toward the cheaper iPad mini starting at $299 without a high-resolution Retina display.




The analyst sees those trends improving margins not only in the near-term, but also headed into Apple's fiscal year 2015. He has increased his forecast for next year's gross margins from 36.6 percent to 38.1 percent, citing four key reasons:
  • Waning of pressure from step-up in deferred revenue along with lower warranty expenses
  • Better fixed cost absorption than Apple saw with the iPhone 5
  • Strong mix of high-end iPhone
  • Speculation that margins on a so-called "iWatch" could be greater than 40 percent
He sees Apple posting 15 percent revenue growth in fiscal 2015 to $211 billion, including sales of a rumored "iWatch." His forecast calls for the company to see a 19 percent gain in earnings per share to $7.63.




Milunovich's new 12-month price target of $115 is an increase from his previous projection of $100. UBS joins a parade of investment firms that have upped their targets, with Barclays ($110), Evercore ($115), Morgan Stanley ($110), J.P. Morgan ($108), and Needham ($97) revising their projections upward in the last month alone.

Comments

  • Reply 1 of 10
    rogifanrogifan Posts: 10,669member
    So far none of these price target increases have had much impact on the stock price.

    I see the FUD is out in full force today:

    Fund managers unconvinced by Apple rebound

    Why you shouldn't buy Apple stocks

    A supersize iPhone is a big risk for Apple
  • Reply 2 of 10
    Just as was said in reviews, the Air made the big iPad relevant again. And honestly, if I'm going to have a 4.7" iPhone, I'm going to pick the 9.7" Air over the 7.9" Mini. Even though I would like to get a Mini as well (better size for reading books).
  • Reply 3 of 10
    hametahameta Posts: 79member
    [B][I][SIZE=4]It is ReaLly ASTOUNDING to Find HOW MUCH STOCK MARKET is RIGGED & MANIPULATED, Contrasting DIFFERENCE Between The Enterprise BACKED UP by VILLAIN and THAT Being ATTACKED by THEM ![/SIZE][/I][/B]


    [B][I][SIZE=4][COLOR=#f09]LOOK AT THIS ![/COLOR][/SIZE][/I][/B]


    [B][I][SIZE=4][COLOR=blue]Google Posted Their Q2 2014 Earning Report on 17/07/2014.
    That Performance is NOT IMPRESSIVE AT ALL !
    Their q2 Revenue Beats Expectations, but Non-Gaap EPS Disappoint.
    Their Earning Increase Are Mainly Boosted by WORLD CUP AFFECT Especially Got Really Lively and Raved This Time ALL OVER THE WORLD but Only Once in Every 4 Years.[/COLOR][/SIZE][/I][/B]

    [B][I][SIZE=4][COLOR=#f09]Their Fundamental CORE CRISIS Never Found Its Way Out and Has Shown It's EVEN Deepened !
    The Report Released Thursday Showed that Google's advertising prices are still dropping to extend a nearly three-year slump.[/COLOR][/SIZE][/I][/B]




    [B][I][SIZE=4]Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of Their Network members, decreased approximately 6% over the second quarter of 2013 Following The Suit of 9% Decline of Last Quarter and remained constant from the first quarter of 2014. Cost-per-click for Google sites decreased approximately 7% over the second quarter of 2013 and decreased approximately 2% over the first quarter of 2014. Network cost-per-click decreased approximately 13% over the second quarter of 2013 and increased approximately 3% over the first quarter of 2014.[/SIZE][/I][/B]



    [B][I][SIZE=4][COLOR=blue]Steady growth in mobile means demand for web-based ads is flagging. That was reflected in Google’s average cost per click, which was down 6 % from last year Continuing From 9% Decline of Last Quarter.[/COLOR][/SIZE][/I][/B]

    [B][I][SIZE=4]Meanwhile, Facebook is aggressively nipping at Google’s heels: Google’s share of US mobile ad spending dropped from almost 50 percent in 2012 to 41.5 percent in 2013. Facebook, on the other hand, Rose sharply: its market share of US mobile ad revenues jumped from 9 percent in 2012 to 15.8 percent in 2013. The US mobile ad market will almost double in 2014, eMarketer projected. That Means Google WILL LOSE THEIR GROUND Heavily and Constantly ![/SIZE][/I][/B]


    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46063/width/500/height/1000[/IMG]



    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46064/width/500/height/1000[/IMG]



    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46067/width/500/height/1000[/IMG]

    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46068/width/500/height/1000[/IMG]

    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46070/width/500/height/1000[/IMG]


    [B][I][SIZE=4][COLOR=#f09]So This Quarter's Earning Call is NOTHING ROSY nor OVERWHELMING at All !
    [/COLOR][/SIZE][/I][/B]


    [B][I][SIZE=4]NONETHELESS, Their Stock Soared MORE THAN 3% Nearly 4% at End of The Day ( The Chart Only Shows Above 3% Because It was As of Half Way Through The Day ), Phew!!!!!!!
    HOW COME CAN IT HAPPEN Witout VILLAIN's STOCK MANEUVERING ??????
    It's ALMOST LAUGHABLE !
    I'm SURE If It Were Apple STOCK WOULD HAVE PLUMMETED SO DRASTICALly ![/SIZE][/I][/B]


    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/46066/width/500/height/1000[/IMG]


    [B][I][SIZE=5][COLOR=#f06]WHY WALL STREET IS SO GENEROUS & LINIENT with Google like " THEIR CHILD " ????????[/COLOR][/SIZE][/I][/B]


    [B][I][SIZE=4][COLOR=blue]On The Other Hand, When It Comes to Apple, THEY DOWNPLAY ANYTHING GOOD & OVERWHELMING about Apple, FIND FAULT OF TRIFLES, QUARREL ANYTHING AND BASH On & On ![/COLOR][/SIZE][/I][/B]


    [B][I][SIZE=4][COLOR=blue]They're NOW DESPERATE to Downplay & Deny The Enormous Potential Effect of Apple & IBM Partnership in ENTERPRISE BUSINESS !


    [/COLOR][/SIZE][/I][/B]
  • Reply 4 of 10
    richard getzrichard getz Posts: 1,142member
    Quote:

    Originally Posted by HAMETA View Post





    On The Other Hand, When It Comes to Apple, THEY DOWNPLAY ANYTHING GOOD & OVERWHELMING about Apple, FIND FAULT OF TRIFLES, QUARREL ANYTHING AND BASH On & On !





    They're NOW DESPERATE to Downplay & Deny The Enormous Potential Effect of Apple & IBM Partnership in ENTERPRISE BUSINESS !



     

     

    Glad you at least mentioned Apple in this rant ;) 

  • Reply 5 of 10
    mpantonempantone Posts: 1,374member
    Quote:
    Originally Posted by Rogifan View Post



    So far none of these price target increases have had much impact on the stock price.

    Target increases really shouldn't have any effect on the daily stock price. Those are longer-term estimates, typically 12-24 months out. It's not like those are expected to be attained in the next week, etc.

     

    The target estimates are primarily aimed at investors who are long on the market, those who will hold a position for over a year so they can get benefits of the lower long-term capital gains tax rate. These target estimates are not for day traders.

     

    It's simply an analyst saying "here's where we think this stock will be in eighteen months." It's up to the investor to decide if some of his/her money would be invested with AAPL or other issues.

  • Reply 6 of 10
    MacProMacPro Posts: 18,161member
    mpantone wrote: »
    Target increases really shouldn't have any effect on the daily stock price. Those are longer-term estimates, typically 12-24 months out. It's not like those are expected to be attained in the next week, etc.

    The target estimates are primarily aimed at investors who are long on the market, those who will hold a position for over a year so they can get benefits of the lower long-term capital gains tax rate. These target estimates are not for day traders.

    It's simply an analyst saying "here's where we think this stock will be in eighteen months." It's up to the investor to decide if some of his/her money would be invested with AAPL or other issues.

    Analysts use a formula something like this: 50% mind games, 50% totally made up stuff and 50% rumors. ;)
  • Reply 7 of 10
    MacProMacPro Posts: 18,161member
    Glad you at least mentioned Apple in this rant ;) 

    I actually missed the Apple reference, thanks for pointing it out. :D
  • Reply 8 of 10
    SpamSandwichSpamSandwich Posts: 30,989member
    Nothing like reading a [B]HAMETA[/B] post in the morning...like a large cup of coffee laced with adrenaline.
  • Reply 9 of 10
    Quote:

    Originally Posted by digitalclips View Post



    Analysts use a formula something like this: 50% mind games, 50% totally made up stuff and 50% rumors. image

    Your math is exact! <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

  • Reply 10 of 10
    sflocalsflocal Posts: 4,537member
    Quote:

    Originally Posted by digitalclips View Post





    Analysts use a formula something like this: 50% mind games, 50% totally made up stuff and 50% rumors. image

     

     

    Quote:

    Originally Posted by anantksundaram View Post

     

    Your math is exact! <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />




    Don't forget there's a +/- 3% error margin. :)

Sign In or Register to comment.