Cowen revises AAPL price target to $133 after four-for-one split
Investment bank Cowen has revised its AAPL price target to reflect continued Apple business strengths, and to incorporate the recent Apple four-for-one stock split.
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Credit: Andrew O'Hara, AppleInsider
In a brief note to investors seen by AppleInsider, Cowen analyst Krish Sankar has updated the 12-month AAPL price target while maintaining Apple's outperform rating.
Sankar hasn't adjusted its investment thesis, still claiming that Services will continue to grow and that the upcoming "iPhone 12" update could spur a wide upgrade opportunity for Apple. Upcoming catalysts, the analyst says, could include a normalization of U.S. and China trade relations and the launch of 5G iPhones in 2020.
The Apple four-for-one stock split, which completed on Aug. 31, gave each Apple shareholder four times the number of shares, with each share worth a quarter of their previous value. Apple said that the split would make the stock "more accessible" to a wider range of investors.
Based on the split, Cowen has updated its model to reflect both the split pricing and the updated share count. The bank's 12-month price target is now set at $133. Its previous PT was $530, an industry-high at the time.
That's based on a 25x earnings multiple to Apple's core business, including iPhone and hardware, and a slightly lower 41x multiple on the recurring Services segment.
Shares of AAPL are trading at $131.79 on Tuesday morning, up 2.05% in intra-day trading.
Credit: Andrew O'Hara, AppleInsider
In a brief note to investors seen by AppleInsider, Cowen analyst Krish Sankar has updated the 12-month AAPL price target while maintaining Apple's outperform rating.
Sankar hasn't adjusted its investment thesis, still claiming that Services will continue to grow and that the upcoming "iPhone 12" update could spur a wide upgrade opportunity for Apple. Upcoming catalysts, the analyst says, could include a normalization of U.S. and China trade relations and the launch of 5G iPhones in 2020.
The Apple four-for-one stock split, which completed on Aug. 31, gave each Apple shareholder four times the number of shares, with each share worth a quarter of their previous value. Apple said that the split would make the stock "more accessible" to a wider range of investors.
Based on the split, Cowen has updated its model to reflect both the split pricing and the updated share count. The bank's 12-month price target is now set at $133. Its previous PT was $530, an industry-high at the time.
That's based on a 25x earnings multiple to Apple's core business, including iPhone and hardware, and a slightly lower 41x multiple on the recurring Services segment.
Shares of AAPL are trading at $131.79 on Tuesday morning, up 2.05% in intra-day trading.
Comments
Wow, that's a daring call with the stock pretty much at that level now! (133 x 4 = $532. Pretty much the same as their pre split target.)
For my part, I'm trimming my Apple position. I've been long (and bullish on) Apple for a long time. I think markets have, for a long time, not really understood the Apple story and significantly undervalued its stock. I don't think that's true now, I don't think markets are significantly undervaluing Apple. It could go up quite a bit from here, but I think the downside and upside risks are better balanced than they had been.
I think Apple is priced for near perfection. It faces a lot of major headwinds. It could come through them without suffering much harm to its profitably (i.e. its ability to increase its profitability). But its profitability could also be significantly impaired. I think it's priced assuming the former. Or, in the alternative, it's priced assuming Apple will soon bring another revolutionary product to market - something that changes things the way the iPhone did. That's also possible. But in the past it had, in my view, great upside potential to more than offset the downside risks and now I don't see as much potential for upside. In other words, it's not the no-brainer long-term investment that I have long thought it was. I think the good potential developments for Apple are largely priced in now.
I still own a fair bit of Apple. So I hope to see additional price gains. But, for me, the time to take some profits has come.
Remember, mostly, with quality companies [do your research], the stock market will raise their price over time.
"Think about a few companies who you like, and from whom you buy their products... and then invest in them," was a piece of market advice given to me many years ago by a wise man.