Apple Inc. has been attracting positive analyst reports in the last couple of weeks, and this doesn’t sound strange because of the recent events that has placed the firm in the news. Apple has once again scored a homerun with the iPhone 6S and iPhone 6S Plus, the Apple Watch is creating its own market, and the iPad Pro promises to rethink everything about the tablet. Hence, it isn’t surprising that the bullish sentiment has drowned out any bearish views about Apple in the market.
However, even the bulls seemed taken aback when one of the most vocal Apple bulls came forward with a $200 price target for the stock. Brian White, a former Cantor Fitzgerald analyst who now works at Drexel Hamilton has initiated coverage on Apple with a $200 price target. On Friday, Brian White said that Apple is the stock to own despite the recent headwinds that the stock has faced on the heels of a supposed economic slowdown in China. Brian rated Apple a “Buy” with a $200 target.
The bullish case for Apple
It is easy to join the bullish bandwagon for Apple when the stock posted the most profitable quarter in history. Joining the bulls is easy when Apple had cash reserves that was more than the GDP of some countries. However, many people will think twice about being long Apple at a time when the stock was facing a bleak outlook because its biggest market outside the U.S. (China) was slowing down. However, Brian notes that fears about the situation in China are overblown.
He believes that the decline in Apple’s share after the fears of a Chinese slowdown provides smart investors with “an attractive entry point”. He also notes that Apple still has room to grow in China. In his words, “despite a slowing economic backdrop, our recent trip to China further supports our view that Apple fever is alive and well across the country,”
Brian also notes that the firm is entering new product categories that will support growth, revenue, and profit going forward. He notes “We continue to believe the TV market is a huge opportunity for Apple to reinvent a stagnant industry”. He also mentioned the firm’s interest in the automotive industry. He says, “Longer-term, we believe it has bigger plans for the automotive market (i.e., outside of the current CarPlay) and a flurry of media reports this year support this notion.”
Apple wins either way
It would be fair to cover the bearish thesis on Apple in order to provide you with a full picture of the investment prospects of the firm. However, one of the most objective analysts of the firms seems to think that the stock is still a bullish play even though a $200 price target might be too aggressive.
Forbes’ Chuck Jones thinks that Apple’s fair valuation is somewhere around $150. At the $200 price target, the stock has a 81% upside to last Friday’s closing price of $1110.38. At the fair $150 price target, the stock will still maintain a 35.89% upside potential.