Apple's (AAPL) Price Target Raised to $129 at Pacific Crest; Analyst Sees Accelerating Growth
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Pacific Crest maintained an Overweight rating on Apple (NASDAQ: AAPL) and raised its price target t $129.00 (from $121.00). Analyst Andy Hargreaves said current iPhone expectations are reasonable, and he sees potential for upside to profit expectations due to strong app store sales.
"We expect Apple to report FQ4 (Sept.) hardware revenue that is largely in line with current consensus expectations. Given the strong App Store download activity announced at Apple's iPhone event, we see the potential for upside to FQ4 EPS and gross margins if monetization of Pokemon Go was solid, which seems likely," said the Hargreaves.
"Our checks on iPhone demand and supply are both consistent with Apple being able to meet current sell-side estimates for 45 million iPhones in FQ4 and 75 million iPhones in FQ1. While we do not see significant upside potential to these estimates at this point, we believe in-line is good enough given AAPL's valuation. We believe buy-side expectations are approximately in line with the sell-side," continued the analyst. "We believe continued strength in apps, an uptick in accessory sales, or improved trends in watch sales could all drive upside to our estimates. Further, the potential for a repatriation tax holiday would disproportionately benefit Apple, which creates optionality that we believe should be captured in our target."
Hargreaves concluded, "We believe the combination of an attractive valuation, improving iPhone growth rates, and optimism around the iPhone 8 cycle create a favorable risk/reward around AAPL. We see upside to our $129 price target, with the potential for further upside if iPhone demand exceeds expectations, or if the company continues building out its services profit model."
Shares of Apple closed at $117.34 yesterday.
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