Recession Could Push Apple Stock 27% Down Says Evercore ISI and Cuts Price Target

June 28, 2022 10:02 AM EDT
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Evercore ISI analyst Amit Daryanani slashed the price target on Apple (NASDAQ: AAPL) to $180.00 per share from $210.00 to reflect “increased macro uncertainty.”

Apple has been included in the “medium” risk bucket with a 20-40% downside potential with the analyst assigning a 27% downside risk to Apple stock if recession pushes the multiple to 19x from 21x currently.

“Apple was in growth mode during the 2008/2009 as we were still at the beginning of the smartphone revolution, so revenue declines in a recession today would likely be more severe vs. the growth they managed in 2009. We are modeling a revenue decline of 3% in a recession (8% below current estimates). We also see margins coming under pressure (-300bps) with iPhone and Services mix likely to decline and we would not expect Apple to make material changes to its R&D spending plans which would add further pressure. Apple should be able to mitigate potential margin compression by ramping up buybacks ($80B in net cash),” Daryanani told clients in a note.

Commscope (NASDAQ: COMM), Sensata (NYSE: ST) and TE Connectivity (NYSE: TEL) have been included in the high-risk bucket with the downside risk exceeding 40%.

Among other price target changes, Evercore ISI slashed the PT on Hewlett Packard Enterprise (NYSE: HPE) to $18.00 from $21.00, on NetApp (NASDAQ: NTAP) to $71.00 from $85.00, and on Cloudflare (NYSE: NET) to $65.00 from $110.00.

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