Goldman Sachs Feels Positive on Apple Following Signing of China Mobile Deal

In a report published Monday, Goldman Sachs analyst Bill Shope reiterated a Buy rating and $620.00 price target on Apple AAPL. In the report, Goldman Sachs noted, “Given Apple's steep wholesale prices in China for the iPhone, we believe subsidy levels will be key to determining steady-state volume levels. With that said, this deal gives Apple access to a growing smartphone installed base at China Mobile, which currently stands at 170 million 3G customers. We believe this could add another 15-20 million units to Apple's annual iPhone shipments, and potentially boost CY2014E EPS by more than 5%. From a nearer-term perspective, the January 17th release date raises two important issues: 1) this tells us that Apple's surprisingly strong December quarter revenue guidance likely included very little China Mobile channel fill, and 2) this suggests that the seasonally weak March quarter will enjoy a sharp tailwind from the China Mobile ramp. These near-term factors likely diminish the shorter-term bear cases for the stock. We reiterate our Buy rating and 12-month target price of $620 on Apple.” Apple closed on Friday at $549.02.