Malcolm Owen
Analysts at Goldman Sachs have improved their view of Apple's share, raising the stock's 12-month target price from $140 to $182 under the belief demand in China is no longer an issue, at the same time as anticipating Apple will beat its guidance for the upcoming financial results.
Goldman Sachs has been slow to update its valuation for Apple's share price, after cutting the target from $182 to $140 in early January along with other analysts following Apple's financial slip. Wednesday's investor note sees the firm bring its target back up to what it was over three months ago.
"We believe Apple can deliver better than FactSet consensus revenue in the March quarter," Goldman Sachs advises, "and guide inline for the June quarter based on a new country level model we are rolling out with this report." The target change is said to "reflect less short term downside" for investors, as well as a "change in our valuation methodology."
For demand of the iPhone, there are some mixed results. Goldman Sachs believes market checks "indicate no further deterioration of demand in China," a suggestion that the situation won't get worse for Apple since its January slip, but at the same time warns "European consumer sentiment implies the possibility for worse demand there."
For later in 2019, the analysts are pessimistic about the next iPhone releases, claiming there is "increasing potential for Apple to miss consensus expectations at the unit and potentially the ASP level." The current forecast is for 61 million iPhone shipments in the December 2019 quarter, which is up 3 million from Goldman Sachs' previous estimate, but 6 million down from the Wall Street Consensus.
The Qualcomm settlement is also flagged as offering "potential risk to FQ3 margins." Apple recently settled with Qualcomm to end a series of potentially expensive lawsuits, agreeing to a multi-year licensing deal and a one-time payment to the chip producer.
The note from Goldman Sachs should also be read with knowledge that Apple is working with the company to release the Apple Card credit card this summer in the United States.
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29 Comments
Considering AAPL closed at $207.48 yesterday I guess this was an easy call for Goldman.
Anyone who took Goldman’s advice lost out on a 40% return to the current level
The analyst at Goldman following Apple is just awful. Hard to understand how he still has his job
AAPL's precipitous drop after October 4, 2018 was completely uncalled for, but its meteoric rise since the end of 2018 is also totally unfounded. Nothing changed fundamentally from the end of 2018. All of this is shameless market manipulation by some very powerful players. They oversold at the end of 2018, brought the market down and created panic among inexperienced investors, who sold AAPL on the way down. Then, these powerful players with a lot of cash on their hands bought between December 24, 2018 and the end of 2018. They have now created a 40% return in one quarter. We shall see what Apple reports next week, but this could be one of the worst performing quarters in the past few years for Apple. Even my financial advisors were telling me to sell AAPL when it was (or around) $155 last year, telling me that Apple was finished. Good thing I have been an AAPL investor for many years now, and have seen these precipitous drops many times. However, going forward, I'm not so sure I want to have so much AAPL, as I do think that the company's ability to grow revenue has stalled.
Conflict of interest!!!
Apple's share price is partly to do with what Wall Street investors believe about Apple (often misguided) but also, I think, by how other companies are doing. All that money has to go somewhere and with Facebook in yet another scandal, Amazon potentially reaching saturation and Microsoft being Microsoft Apple may be seen as the safest place to park your cash. So the rise is not 'totally unfounded'. And Apple does actually create products that people want whereas Facebook has nothing if people lose trust (as they are in the richer countries in the world) and Amazon goes nowhere in China (we have our own online store thanks very much). I'm very happy to own Apple shares and I loose no sleep at night at all worrying about falls. Facebook's/Spotify's/Amazon's/Samsung's failure is Apple's success. Obviously, I know nothing about shares but I did know enough to buy a wedge of Apple shares a few years ago so feeling smug in may ignorance! :smile: