Apple Inc. (NASDAQ:AAPL) shares dropped by most in over 4 years yesterday as a result of company’s disappointing revenue and iPhone sales figures, after that we saw a bunch of analysts (even bullish ones) queuing up to cut their price targets on the stock.
- Sterne Agee
- Evercore Partners
- ABG Sundal Collier
Now here are the names of two more research firms that have recently lowered the ‘Price Target’ for Apple Inc. (NASDAQ:AAPL) stock.
- Hilliard Lyons Equity Research
FBN reiterate Outperform but lowering PT to $650.
FBN Securities retain its outperform rating on Apple Inc. (NASDAQ:AAPL) but cuts the price target to $650. According to the research firm, Apple’s glory days are now behind the company, and it will now need to better face strong competition from Samsung (which has succeeded in offering many smartphone and tablet form factors and price points that help internationally), develop a strategy for better penetrating faster-growing geographies (such as by introducing a lower-end iPhone, which introduces cannibalism and margin risks), continue to innovate (iTV, possibly wearable computers), and better penetrate China (now 13% rev., up 67% Y/Y last quarter) where there are several strong competitors, including Samsung as well as smaller companies such as Coolpad.
FBN believes Apple Inc. (NASDAQ:AAPL) stock will tread water until March/April after which the firm expect the stock to exhibit more strength as investors discount possible iPhone 5S and iPhone Math introductions in the June quarter as well as possible iTV and China Mobile opportunities which could begin in the back half of the year. Although the firm is modeling negative EPS growth in F2014, the introduction of iTV and China Mobile opportunities (not currently factored into FBN’s numbers) would add about 12-16% EPS accretion to F2015 EPS, in analysts opinion, and result in positive EPS growth that year.
Hilliard Lyons are lowering its Apple Inc. (NASDAQ:AAPL) price target to $680 (a reduction of ~6%), however with firm’s Long-term Buy rating Hilliard’s analysts extend their investment time horizon to the end of fiscal year 2014. The research firm base its price target on a forward multiple of 13x, above Apple’s current multiple which, in their analysts opinion, has overly contracted due to the significant amount of bad news and pressure affecting the stock’s share price. Hilliard Lyons maintain its 13x multiple despite lower margins as Apple Inc. (NASDAQ:AAPL) has already experienced significant multiple contraction in recent years from a high of 87x to today’s intraday low of 9.5x. Given firm’s long term growth outlook for Apple Inc. (NASDAQ:AAPL) and the company’s balance sheet strength, a 13x multiple (below that of the S&P 500 Index) is warranted, in Hilliard’s analysts opinion.
The research firm’s price target is calculated as follows: a forward multiple of 13 times firm’s FY’14 EPS estimate of $52.34. Hilliard Lyons combine its earnings multiple price target with a similar price target resulting from research firm’s discounted cash-flow model. For illustrative purposes only, ex-cash of $145 per share, Apple’s core business trades at only 6x analysts’ FY’14 estimate.
Despite recent setbacks, Hilliard Lyons’ thesis remains intact, albeit growth at a slower rate over a longer time horizon. In the firm’s view, Apple Inc. (NASDAQ:AAPL) is attractively valued at current price levels. The research firm view Apple shares as a core technology holding with the potential to significantly outperform the market over the long-term. The analysts believe investors seeking long-term capital appreciation with significant cash returned to shareholders in the form of dividend increases and share repurchases should consider purchasing shares of Apple Inc. (NASDAQ:AAPL). Hilliard Lyons’ FY’14 price target implies a potential total return of over 26% per year with indicated quarterly dividends included at today’s intraday price of $460. The research firm reiterate its suitability rating of 1.