UPDATE: BofA Securities Upgrades Apple (AAPL) to Buy
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BofA Securities analyst Wamsi Mohan upgraded Apple (NASDAQ: AAPL) from Neutral to Buy with a price target of $210.00 (from $160.00).
The analyst comments "We expect Apple to introduce an augmented reality/virtual reality (AR/VR) headset, either by the end of 2022 or early 2023. We view this technology as a game-changer as it will enable many new applications which will require high performance hardware and higher access speeds. We upgrade to Buy, from Neutral, given: 1) we now expect a stronger iPhone upgrade cycle in F23 driven by the need for higher connectivity where “AR becomes the killer app for 5G”, 2) we model higher growth in Services revenue as we expect Apple to be able to charge more for more immersive AR/VR enabled Apps as well as increased traction with a broader installed base with other categories including advertising, 3) we expect Apple to be able to charge a premium for its AR/VR headset, 4) we expect the multiple to re-rate higher as has been the case before major product launches (Fig 6, 7), 5) we expect capital returns to remain strong (buybacks, dividend), 6) Apple currently remains under-weighted vs. S&P500 (Fig 4, 5) and anticipation of this new product launch, in our opinion, could induce institutional investors to increase positions, 7) launch of iPhone SE could help drive better seasonality for the Mar qtr, 8) Risks around services lawsuits manageable with Apple likely to charge for App and in-App purchases made outside the App store, 9) market positioning positive as shares likely to outperform in a broader market down cycle, and 10) the underperformance for most of the year (Fig 2) suggests cycle risks of iPhone 13 are well understood."
Shares of Apple closed at $175.74 yesterday.
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