Cowen bumps AAPL to $470, says it's a 'defensive stock' for a post-coronavirus world
Investment bank Cowen has raised its AAPL price target to $470 on Apple's better-than-expected June quarter results and its continuing status as a "defensive" stock.
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Credit: Andrew O'Hara, AppleInsider
During the June quarter, sales of iPhones were resilient and strong Mac and iPad demand showed the "durability" of Apple's portfolio, lead analyst Krish Sankar wrote in a note to investors seen by AppleInsider. The results have set an "encouraging outlook" for Apple into 2021, based mostly on continued Services momentum and the upcoming "iPhone 12" cycle.
Apple's Q3 results were actually "well above" the highest consensus. Ahead of the earnings report, Sankar originally forecast quarterly revenue of $50.18 billion. Apple actually reported $59.7 billion in revenue.
The company's iPhone business actually managed to grow 2% year-over-year, despite declining smartphone demand. Sankar estimates that Apple shipped 35 million units in the quarter, and estimates that it'll ship 40 million in the next one.
Thanks to new work-from-home and remote education trends, both the iPad and Mac spheres showed growth in the June quarter -- up 31% and 22% year-over-year, respectively.
For Services, Apple was able to achieve a milestone of doubling 2016 sales two quarters early. Sankar notes that the "long term growth profile for the Services segment remains intact and segment gross margin reached a record 67.2%vs the LTM average of 64.5%."
On capital returns, the analyst estimates around $77 billion in buyback authorization. Apple repurchased $16 billion worth of AAPL in the June quarter.
"A diversified hardware portfolio helped AAPL weather a shift to WFH spendingwhile supporting robust FCF. Looking into CY21, a 5G iPhone cycle coupled with a growingServices business makes AAPL a defensive/growth stock to own in a (post) COVID-19 world," Sankar writes.
The analyst is bumping Cowen's 12-month AAPL price target to $470, up from $400. That's based on a 23x earnings multiple on the core business and a 35x multiple on Services, leading to a blended 28x price-to-earnings multiple on a 2021 earnings-per-share estimate of $16.83.
Shares of AAPL were trading at about $410 on the NASDAQ through most of Monday morning. Apple's stock price nearly immediately jumped 6.42% after Thursday's earnings call, eclipsing the $400 landmark.
-l.jpg)
Credit: Andrew O'Hara, AppleInsider
During the June quarter, sales of iPhones were resilient and strong Mac and iPad demand showed the "durability" of Apple's portfolio, lead analyst Krish Sankar wrote in a note to investors seen by AppleInsider. The results have set an "encouraging outlook" for Apple into 2021, based mostly on continued Services momentum and the upcoming "iPhone 12" cycle.
Apple's Q3 results were actually "well above" the highest consensus. Ahead of the earnings report, Sankar originally forecast quarterly revenue of $50.18 billion. Apple actually reported $59.7 billion in revenue.
The company's iPhone business actually managed to grow 2% year-over-year, despite declining smartphone demand. Sankar estimates that Apple shipped 35 million units in the quarter, and estimates that it'll ship 40 million in the next one.
Thanks to new work-from-home and remote education trends, both the iPad and Mac spheres showed growth in the June quarter -- up 31% and 22% year-over-year, respectively.
For Services, Apple was able to achieve a milestone of doubling 2016 sales two quarters early. Sankar notes that the "long term growth profile for the Services segment remains intact and segment gross margin reached a record 67.2%vs the LTM average of 64.5%."
On capital returns, the analyst estimates around $77 billion in buyback authorization. Apple repurchased $16 billion worth of AAPL in the June quarter.
"A diversified hardware portfolio helped AAPL weather a shift to WFH spendingwhile supporting robust FCF. Looking into CY21, a 5G iPhone cycle coupled with a growingServices business makes AAPL a defensive/growth stock to own in a (post) COVID-19 world," Sankar writes.
The analyst is bumping Cowen's 12-month AAPL price target to $470, up from $400. That's based on a 23x earnings multiple on the core business and a 35x multiple on Services, leading to a blended 28x price-to-earnings multiple on a 2021 earnings-per-share estimate of $16.83.
Shares of AAPL were trading at about $410 on the NASDAQ through most of Monday morning. Apple's stock price nearly immediately jumped 6.42% after Thursday's earnings call, eclipsing the $400 landmark.
Comments
Glasses are going to be huge though. Maybe not as big as Apple Watch, but not far from it. Especially by the time they hit gen 2 or 3 as they've done in the past with Watch, iPhone, and iPad.
so would I want to wear these all of the time? No. Would I want to wear these most of the time? No. When? Not very often.
An Apple Watch could drive the display too but it's best to have something with a large battery and processing power to drive the larger display and inputs like the Apple Pencil need the tactile surface. It could extend a flat, passive surface for tactility and to help with the opacity.
Some of the AR demos on the iPhone are really well made. Quite a few struggle to maintain the stability but Ikea's Place app is very stable and high quality:
https://apps.apple.com/us/app/ikea-place/id1279244498
That's placing full 3D objects in a scene in real-time but all it needs for computing is a flat unlit render of the computer UI and projecting it onto glasses shouldn't use nearly as much computing power as the iPhone AR because it's not doing real-time capture and superimposing. It does mean your hands are behind the UI but the user's hand movement can be tracked using a depth sensor and a digital equivalent rendered on top or the shape can be tracked and the UI masked out according to that 3D shape with a soft edge.
This is a difficult product to get right because there are a lot of important things that need to be done right but if it's treated as an accessory like the Apple Watch, people will gradually start to see the benefit and it will improve with each iteration.
The ultimate step is to put images and audio directly into the brain:
https://www.cnet.com/news/elon-musk-says-a-neuralink-update-is-coming-in-august/
https://www.roadtovr.com/gabe-newell-brain-computer-interfaces-way-closer-matrix-people-realize/
https://www.technologyreview.com/2020/02/06/844908/a-new-implant-for-blind-people-jacks-directly-into-the-brain/
Once you can feed images and audio directly to the brain, that means an end to blindness and deafness but that will need involvement from the medical field and a lot of human trials for safety. Using glasses will be the closest we get without medical intervention and it should still offer a pretty compelling use case, even being supplementary to physical displays for now.
Google Glass was nothing like these will be. Wearing corrective lenses isn't meant to be fun, and certainly not an apt comparison to this product's use case. Pretty silly to dismiss it outright based on that analogy.
tens of millions of people wear contacts so they font have to wear glasses. It’s going to be hard to overcome that much distaste. Sunglasses are different, and most people think that’s cool. I know a couple who wear them indoors, which isn’t cool.
we really know little about what Apple is doing. Everything we hear is rumor based on nothing more that hopeful guesses. It would have to be extraordinary.