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Oppenheimer: Apple Still Worth $155, But 'Major' Sentiment Shift Is A Risk

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Oppenheimer: Apple Still Worth $155, But 'Major' Sentiment Shift Is A Risk
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In a report published Monday, Oppenheimer analyst Andrew Uerkwitz maintained an Outperform rating on Apple Inc. (NASDAQ: AAPL), with a price target of $155, despite the recent pressure on the company's shares.

Apple's shared declined 12.5 percent, despite the company reporting its F3Q15 results ahead of consensus expectations and announcing a strong outlook for F4Q15. Analyst Andrew Uerkwitz said that the company's shares may have come under pressure on account of concerns related to decelerating iPhone growth, a slowdown in the Chinese economy, and lack of new growth drivers.

"We believe discounting Apple based on these concerns is unjustified and this note explains in detail why Apple's growth potential in China, the overall smartphone market, and in other products is underappreciated," Uerkwitz wrote.

In the report Oppenheimer noted, "We believe the iPhone's growth in China is not over. We estimate that China's iPhone installed base will surpass that of the US in 2015 while maintaining above-market Y/Y growth."

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Uerkwitz expects the high-end Android market to continue to deteriorate, and the iOS to gain share in "high-growth, low-penetration emerging markets," as consumers become richer and more sophisticated. Moreover, the market seems to be Apple's Service revenues as a future revenue and profit driver.

Uerkwitz believes that Apple will outperform the overall market in the back half of the year and not be impacted as significantly as its competitors by the macro weakness.

Despite Apple's sound fundamentals, the stock could lose support as tech investors shift their preference to internet related names, such as Netflix, Inc. (NASDAQ: NFLX), Google Inc (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN) and Facebook Inc (NASDAQ: FB), the Oppenheimer report added.

Latest Ratings for AAPL

DateFirmActionFromTo
Jan 2018Longbow ResearchDowngradesBuyNeutral
Dec 2017InstinetDowngradesBuyNeutral
Nov 2017Wells FargoReinstatesMarket PerformMarket Perform

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