Piper Jaffray rates Apple stock its top pick for remainder of 2015 with $172 target

Posted:
in AAPL Investors edited October 2015
Heading into the fall shopping season, Apple stock is investment firm Piper Jaffray's top large-cap pick for the rest of the year and into 2016, citing continued growth for the company's iPhone lineup led by the new 6s series.




Analyst Gene Munster said in a note to investors on Monday that he sees favorable trends for Apple heading forward. He believes investors will begin to price these benefits into the stock heading into 2016.

In addition to year-over-year growth for the iPhone platform, Munster also expects a strong holiday quarter driven by the Apple Watch, new iPad Pro, and Apple TV.

Specifically, he expects that Apple will offer guidance for the holiday quarter at the high end of Wall Street expectations, at about $77 billion. Apple will guide its December quarter results when it discloses its September quarter earnings next Tuesday, Oct. 27.

Munster is also bullish on the shift to new handset upgrade programs, which he believes will encourage consumers to buy new iPhones more frequently. His projections see Apple's own iPhone Upgrade Program helping to drive a tailwind of 10 percent more U.S. iPhone units over the next three years, through calendar year 2018.

Apple plans to launch its iPhone Upgrade Program internationally in the future, which he expects will help drive iPhone sales higher by 5 to 7 percent in the next four-plus years.

Finally, Munster is also bullish on Apple's anticipated "iPhone 7," which he believes will begin driving investor hype in the coming months, despite not being expected to debut until September of 2016. With a so-called "iPhone 7" expected to introduce a revamped design, he believes next year's upgrade will be a "more revolutionary cycle," driving sales of the blockbuster handset even higher.

Alongside its glowing endorsement of AAPL stock on Monday, Piper Jaffray has reiterated its "overweight" rating for shares of the company, with a 12-month price target of $172. Munster is among the most bullish analysts covering AAPL tracked by AppleInsider, and has maintained a $172 target since July.
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Comments

  • Reply 1 of 28
    AAPL at 172... that would be a very nice Christmas present. Not sure Wall Street Grinch wants us to have this.
  • Reply 2 of 28
    MacProMacPro Posts: 19,336member
    I wish. Doubt it though, the manipulators will never allow AAPL to be correctly valued.
  • Reply 3 of 28
    bobschlobbobschlob Posts: 1,074member

    One of the worst analysts out there.

    Hey Gene!! Stop "helping".

  • Reply 4 of 28
    red oakred oak Posts: 875member

    I hope TC is buying back massive amount of stock.  Including upcoming earnings announcement, PE ratio is going to drop to 11.75 

     

    It is a joke.  The only way to take advantage of it is to remove large blocks of the stock from the market.   Mr. Market is going to turn around one day, and 50% of Apple will have been "privatized" vs. 2010 levels.  The long term implications if Apple can pull it off are profound, in terms of materially higher EPS and the ability to dramatically increase the dividend payout if they wish

     

    Heck, they could conceivably buy back $300 billion of the company in five years.   With no impacts in the investments they need to make.  At $120 avg price, that would be 2.5 of 5.7 billion shares.   3.2 billion shares remaining.   They could conceivably pay $10/share dividend on the remaining balance 

  • Reply 5 of 28
    xzuxzu Posts: 139member
    Only if they sell a ton more iPhone 6s's... I can't find a Mac I would like to buy.
  • Reply 6 of 28
    misamisa Posts: 827member
    Analyst Gene Munster said in a note to investors on Monday that he sees favorable trends for Apple heading forward. He believes investors will begin to price these benefits into the stock heading into 2016.

    Wall St people are still going "Apple is going to drop Intel CPU's pretty soon" despite having zero comprehension of the performance spread between the chips.

    It's like saying GM is going to stop selling all Internal Combustion Engine cars because their Plug-in Electric cars are selling. Not considering that the performance characteristics are far enough apart and only overlap in the "drive from home to work within 20 miles" aspect.

    Putting A-series chips in a laptop is suicide for that platform, Microsoft has already shown that customers have no appetite for a laptop/tablet that can't play all existing content, and developers have proven(especially Adobe) that they only change if dragged kicking and screaming. It's far more likely that the iPad/iPad Pro will have more laptop grade software ported to it as developers figure out how to make the software touch-compatible rather than Apple trying to create a x86-64 Rosetta layer that will run x86 software at 1/4th the speed, and people complain that their new Mac's run slower than their old one. Fat binary or not, it just doesn't make sense until you start seeing XCode default to a x86-64/ARM64 fatbinary. Until we see that, I'd say that any rumors that Apple is going to switch CPU's in their laptops and desktops as absurd.
  • Reply 7 of 28
    jakebjakeb Posts: 559member
    Quote:

    Originally Posted by Misa View Post





    Wall St people are still going "Apple is going to drop Intel CPU's pretty soon" despite having zero comprehension of the performance spread between the chips.

     

     

    There's even rumors that Intel will produce the A10. They've been working on a super LTE chip integration that is designed to be used as a part of a system on chip and work nicely with their 10nm process. 

  • Reply 8 of 28
    formosaformosa Posts: 261member
    Quote:
    Originally Posted by jakeb View Post

     

     

    There's even rumors that Intel will produce the A10. They've been working on a super LTE chip integration that is designed to be used as a part of a system on chip and work nicely with their 10nm process. 




    Does Intel have the manufacturing capacity to satisfy the A10 needs of iPhone 7 plus all iPads? I don't think they do.

     

    Adding the baseband (LTE) portion will make the chip more complex and likely decrease yields.

  • Reply 9 of 28
    teejay2012 wrote: »
    AAPL at 172... that would be a very nice Christmas present. Not sure Wall Street Grinch wants us to have this.

    Looks like AAPL is stuck in a narrow range for the time being and we are most certainly not going to see $130, $150 or $172 for some time. AAPL is unable to shake off whatever it is that has the stock frozen for the time being. Maybe voluntarily get off the dinosaur Dow?
  • Reply 10 of 28
    satchmosatchmo Posts: 2,699member
    Quote:

    Originally Posted by xZu View Post



    Only if they sell a ton more iPhone 6s's... I can't find a Mac I would like to buy.



    Same here.

    Frustrating when I have money to give Apple.

    As for $172...it could be $72, or $272 when we're listening to analysts. 

  • Reply 11 of 28
    radarthekatradarthekat Posts: 3,355moderator
    Quote:

    Originally Posted by TeeJay2012 View Post



    AAPL at 172... that would be a very nice Christmas present. Not sure Wall Street Grinch wants us to have this.

     

    Well, typically price targets are for one year out.  Which does make you wonder why they change more often than that.  Such a game.

  • Reply 12 of 28
    tenlytenly Posts: 709member
    sog35 wrote: »
    TC can't buy stock right now. Blackout period for buybacks is about 5 weeks before earnings and 2 days after earnings

    That's definitely true for his personal account - but I don't believe the same rules apply for the company stock buyback that has been announced and registered.
    IMO, the only way Apple gets fairly valued by Wall Street is if Apple makes a threat to go private.  Apple has already spend over $100 billion in buybacks that has done absolutely ZERO to the stock price. The value of total shares outstanding is the same as it was in Sept2012. So basically the buyback has done ZERO.

    IMO Cook should:

    1. Make it public that Apple is in early talks to go private
    2. Stop buyback immediately with the intent to hoard cash to take the company private

    Even if Apple has no intent to go private this threat of going private will stop many manipulators of trying to short Apple. Even the most dilusional bear knows that Apple's stock price is undervalued to the extreme based on fundamentals. All short bets against Apple is based on the ability of Wall Street to manipulate the price down, and nothing to do with economic reality of the company. The premium to go private would be at least 50% higher than the current stock price and would destroy any one who is short Apple.

    Wow! What a great way for Tim Cook to get thrown in jail...! lol A false statement about taking the company private would be illegal from a CEO.

    I wish the articles that talk about how many shares Apple has repurchased also spoke about how many new shares have been issued in the same period and that they provided an update on the number of total shares outstanding. Sure - AAPL keeps buying back shares and cancelling them - but at the same times they are still creating new shares and issuing them as compensation and incentives for employees and executives. I'm curious as to how much headway we're actually making in reducing the total number of shares outstanding...
  • Reply 13 of 28
    tenlytenly Posts: 709member
    sog35 wrote: »
    Nope.  There are blackout rules for corporate buybacks.

    http://www.bloomberg.com/news/articles/2015-03-23/buyback-blackout-leaves-u-s-stocks-on-their-own-before-earnings



    Wrong. There is nothing illegal with a CEO of a company stating that they are exploring the possibility of going private.  Just as its not illegal for a CEO to state they are exploring the possibility of a merger or an acquistion.

    My point is even the mere threat of going private would help Apple's stock tremedously. It would scare a ton of Wall Street and cause them to close their short positions.



    March 2013 Apple peaked at about 6.58 billion shares
    July 2015 Apple is at 5.70 billion shares

    https://ycharts.com/companies/AAPL/shares_outstanding

    They have purchased about 13% of outstanding shares since Mar2013

    Interesting. Thanks for the clarifications and the citations. I've got AAPL call options at the moment that expire in April. Need the stock price to be 116 to break even on the bet - every $ above that earns me $1100.

    Are you still calling $150 by end of year? What's your guess for April 2016?
  • Reply 14 of 28
    shsfshsf Posts: 302member

    How can one buy apple stock in Europea? From the German Stock Market?

  • Reply 15 of 28
    mj webmj web Posts: 918member

    As a long term AAPL investor I agree with Munster. $172 by Fall 2016 is realistic considering the iP 7 release. The tide goes in and the tide rolls out. AAPL is taking a seasonal breather before a holiday pop that should put it in the 130s by year end. AAPL was punished this year because the Watch, Apple TV, and Apple Music did not live up to Wall Street expectations. 

  • Reply 16 of 28
    tenly wrote: »
    Interesting. Thanks for the clarifications and the citations. I've got AAPL call options at the moment that expire in April. Need the stock price to be 116 to break even on the bet - every $ above that earns me $1100.

    Are you still calling $150 by end of year? What's your guess for April 2016?

    Be careful about soliciting stock advice on the Internet. You should basically ignore everyone and follow your own research or gut.
  • Reply 17 of 28
    Quote:

    Originally Posted by sog35 View Post

     

    TC can't buy stock right now. Blackout period for buybacks is about 5 weeks before earnings and 2 days after earnings

     


    Can you cite a link for this? I had thought that it was in the range of a couple of weeks prior to couple of days after (typically, the same time frame as execs not being allowed to do insider buys/sells).

  • Reply 18 of 28
    Quote:

    Originally Posted by sog35 View Post

     

    http://www.bloomberg.com/news/articles/2015-03-23/buyback-blackout-leaves-u-s-stocks-on-their-own-before-earnings

     

    "While the data isn’t conclusive, owning stocks during the five-week stretch when repurchases were curbed has generated a return that trails the market average over the past two years.."


    I think the Bloomberg article is wrong. The journalist is speculating there. Here is a much more credible link. http://corpgov.law.harvard.edu/2013/03/14/questions-surrounding-share-repurchases/

     

    It suggests that the only legal 'timing' restrictions are that it not be an "opening transaction", and depending on size, not be bought 10-30 minutes before closing.

     


    But also suggests that a company must follow the same rules as windows for insider buy/sells, to avoid potential liability for insider trading:


     


    "What steps can a company take in order to avoid liability for insider trading?

    A company is the “ultimate” insider and therefore, concerns about purchasing shares while in possession of material non-public information are magnified. If any director, officer or employee of the company is in possession of material, non-public information about the company, the company should not be repurchasing shares. If the company does not possess material non-public information, one step that the company can take in order to protect itself with respect to repurchases in the future is to implement a Rule 10b5-1 trading plan. If the company is repurchasing outside of a Rule 10b5-1 trading plan, it should limit its purchases to open window periods when officers and directors are able to buy and sell securities of the company. In addition, the company also can choose to disclose any material non-public information prior to any share repurchase if it is in possession of material non-public information at a time when it is seeking to make a share repurchase outside of a Rule 10b5-1 trading plan."

    Essentially, it is saying that to avoid liability for insider trading, the company should make it coincident for the periods of no insider buys/sells. If so, that is usually 10 days before and 2 days after.

    In any event, five weeks seems like a VERY long time, since that would be tantamount to saying that a company can't repurchase its stocks for over 40% of the trading year (5*4 weeks + 8 additional trading days). That is somewhat ridiculous, in my view. That's the reason I think Bloomberg is wrong.

  • Reply 19 of 28
    shsfshsf Posts: 302member

    Gene Munster... enough said.:no:

  • Reply 20 of 28
    crowleycrowley Posts: 8,224member
    Quote:

    Originally Posted by sog35 View Post

     

    Now imagine if the threat to go public was made by Cook.  The stock would jump big time.  


    It'd tank, because everyone would think the CEO was on the sauce.

     

    Not going to happen dude, let it go.

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