5 Reasons Apple (AAPL) Should Outperform - RBC
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RBC Capital analyst, Amit Daryanani, reiterated his Outperform rating on shares of Apple (NASDAQ: AAPL) noting 5 reasons shares should trade up:
1) Samsung woes with the Galaxy Note 7 could enable AAPL to actually accelerate their share gains, a dynamic we think still would have occurred in the absence of Samsung issues, but perhaps at a lower magnitude vs. the current scenario
2) mix should shift higher toward the premium model – we think ASPs could surprise on the upside given a more material feature differential between 7+ vs 7 this time around
3) attractive valuation with the stock trading at ~8x FTM EV/FCF and ~12x PE (~9x ex-cash),
4) Apple has historically outperformed in volatile markets (more of a relative vs. absolute comment)
5) FTM estimates should drift higher given extra week in December, better margin stability and ASP tailwinds
In addition to EPS growth, the stock could benefit from multiple expansion as AAPL's current discount vs. S&P500 is near historical trough levels (~-25% discount). The analyst thinks there is potential for multiple expansion driven by share gains, and margin stability/ASP tailwinds from the upcoming iPhone cycle.
No change to the price target of $117.
Shares of Apple closed at $107.95 yesterday.
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