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Apple (AAPL) Price Target Raised to $140 at FBN Securities

January 28, 2015 10:27 AM EST
Get Alerts AAPL Hot Sheet
Price: $173.31 +2.12%

Rating Summary:
    40 Buy, 24 Hold, 7 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 6 | Down: 3 | New: 1
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FBN Securities maintained an Outperform rating on Apple (NASDAQ: AAPL) and raised its price target to $140 (from $130). Analyst Shebly Seyrafi was impressed by iPhone unit shipments in Q1, which beat consensus by 13%.

"We are also impressed by the company’s strong revenue from Greater China, where revenue of $16B grew by 70% Y/Y (vs. a tough compare), leading to Greater China growing to 22% of revenue from 17% the year before," said Seyrafi.

"Somewhat disappointing was iPad sales, where unit shipments of 21.4M declined by 18% Y/Y even with a lower ASP ($419, down 5% Y/Y and down 3% Q/Q). We believe that the tablet market is mature and model tablet market unit growth of only 3% in 2014 and only 6% in 2015 (and yes, there is tablet fatigue, especially with innovative notebooks like 2-1 and thin and light). We also believe that AAPL’s larger screen iPhones are cannibalizing its iPad sales. However, this is not a bad trade-off as we estimate that iPhone GMs are close to 46-50% while iPad GMs are close to 30%. MAC unit growth of 14% Y/Y did exceed PC market growth of -2% Y/Y as units only slightly missed consensus," continued the analyst.

"Bears on AAPL will state that what we saw in FQ1 was just pent-up demand for the larger-screen iPhone and that there is no next “big thing”. However, our DCF on AAPL arrives at a $140PT assuming only 6% revenue growth in 2016 so we are not modeling large growth after F2015 anyway. Instead, we see AAPL benefiting from a series of smaller drivers, such as the iWatch and Apple Pay. AAPL will start shipping its iWatch in April (a bit later than we and others were anticipating)," he added.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $109.14 yesterday.



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