Apple (AAPL) PT Raised to 'Street High' $530 at Cowen on SOTP; Valuation Not Stretched Versus Peers

Cowen analyst Krish Sankar raised the price target on Apple (NASDAQ: AAPL) to a 'Street High' $530.00 (from $470.00) while maintaining an Outperform rating. Sankar said valuation may appear stretched on an absolute basis, but not relative to peers.

The analyst commented, "We do a sum-of-the-parts analysis to arrive at our price target of $530 (was $470) applying a 25x (was 23x) earnings multiple to the core businesses (iPhone, hardware, etc.) and a 41x (was 35x) multiple to the recurring revenue Services segment. This leads to a blended 31x P/E multiple on our CY21 EPS of $16.83 (sell-side ~$16.11, buy-side around $17). The higher core hardware P/E is driven by potential for share gains in the premium segment entering the 5G upgrade cycle, and the higher Services P/E is consistent with EDA companies (recurring revenue model). On a blended basis the 31x multiple is consistent with other mega-cap tech companies with AAPL showing strong revenue growth and FCF yield, and also compares favorably to consumer staples such as CLX."

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