FBR Still Likes Apple At $120, Is 'Cautiously Optimistic' On Stock

• Shares of Apple Inc. AAPL have plummeted 19 percent since November 12 and are currently trading near their 52-week low of $92.
• FBR’s Christopher Rolland maintained an Outperform rating on the company, with a price target of $120.
• Rolland mentioned that he was “cautiously optimistic” that Apple can satisfy the innovation hurdle currently faced by it.

Apple’s strength lies in its competitive advantages in integrated software and hardware, and a world class cache and brand.

Analyst Christopher Rolland believes that the company’s shares are well supported by an “inexpensive valuation,” and stated that although Apple’s “hyper growth years are likely in the rearview mirror,” the latest downdraft in iPhone shipments is “temporary.”

A slowdown in generational product innovation has resulted in the lengthening of the handset replacement cycle, affecting the “handset sell-through,” the analyst noted, while adding, “If Apple’s next-generation handset were to offer innovation that compelled consumer upgrades, this viscous lengthening of this cycle would work in the reverse, likely driving meaningful unit growth once again.”

Apple is expected to post 2Q16 revenues and EPS of $52.3 billion and $1.97, respectively. The company’s revenues and EPS for FY16 and FY17 are estimated at $225.8 billion and $8.95, and $243.9 billion and $10.07, respectively.