10 Reasons Why BofA Upgraded Apple (AAPL) Shares to Buy Today

December 14, 2021 6:30 AM EST
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Price: $148.11 -1.96%

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    46 Buy, 17 Hold, 5 Sell

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Shares of Apple (NASDAQ: AAPL) are up about 0.5% in pre-open Tuesday after BofA analyst Wamsi Mohan upgraded to Buy from Neutral and raised the price target to $210.00 per share from the prior $160.00.

The analyst expects Apple to launch an augmented reality/virtual reality (AR/VR) headset by the end of the next year or early 2023. Yesterday, Wedbush analyst Daniel Ives said he expects the launch to take place in the summer of 2022.

Mohan sees AR/VR technology as a “game-changer” that will require “high-performance hardware and higher access speeds.”

The analyst lists 10 reasons why he moved from Neutral to Buy on Apple stock.

  1. A stronger iPhone upgrade cycle in F23 expected;
  2. Higher growth in Services revenue expected;
  3. Apple likely to charge a premium for its AR/VR headset;
  4. Expects multiple to re-rate higher;
  5. Capital return to remain strong;
  6. Apple is underweighted vs S&P500;
  7. iPhone SE to be launched early next year;
  8. Risks around lawsuits seen as ‘manageable’;
  9. Market position positive as Apple shares likely to outperform if the market moves lower; and
  10. Underperformance for most of the year (Fig 2) suggests cycle risks of iPhone 13 are well understood.

The raised price target reflects revenue and EPS estimates for 2023 that are ahead of the Street.

Apple stock price closed at $175.74 yesterday.

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