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6 Reasons Apple Has 50% To 85% Upside

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Shares of Apple Inc. (NASDAQ: AAPL) are spiking on Friday morning, near $100 per share after Piper Jaffray analyst Gene Munster reiterated that the stock makes a good buy ahead of earnings and said most of the bad news is "priced in."

See Also: Gene Munster Cuts iPhone Estimates By 10%

Here were Munster's main points:

  1. Apple's current valuation shows most "bad news" is priced into the stock, given the stock's similar behavior in 2013.
  2. Stock multiples typically expand before new iPhone model launches. The iPhone 7 is expected to be launched in September.
  3. Apple could have 50 percent upside from current levels and Munster's price target implies 85 percent upside.
  4. Buybacks should drive single-digit EPS growth "regardless of revenue." If revenue stays flat, EPS can grow 3 percent per year if Apple keeps repurchasing $20 billion to $30 billion a year.
  5. Apple should post December quarter margins toward the "high-end" of its guidance, near 40 percent (despite other analysts' bearishness in this area).
  6. Apple's upside exists despite oil macro risks, China issues and EU "instability."

Apple shares are near $99.97 on Friday as of this writing.

Posted-In: Gene Munster Piper JaffrayLong Ideas News Previews Movers Tech Trading Ideas


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