Market Overview

Goldman On Apple: Waiting On The Sidelines

Goldman On Apple: Waiting On The Sidelines
Related AAPL
Bulls & Bears Of The Week: Apple, Ford, Nike, Verizon And More
Barron's Picks And Pans: Apple, Caterpillar, Lennar And More
Top Five Weekend Stock Stories - Dec. 9, 2018 (TalkMarkets)

Apple Inc. (NASDAQ: AAPL)'s vast and loyal customer base implies the iPhone maker boasts significant long-term potential, but that doesn't mean investors should rush to buy the stock, according to Goldman Sachs. 

The Analyst

Goldman Sachs' Rod Hall initiated coverage of Apple with a Neutral rating and $161 price target.

The Thesis

Apple's customer base stands at more than 600 million primary users, which gives the company "significant longer-term value" — but the same can't be said for the near-term, Hall said in the initiation note. (See the analyst's track record here.) 

Apple signaled weakening near-term data points on iPhone X demand, which could result in negative revenue estimate revisions through Apple's June quarter, the analyst said. 

Beyond the June quarter, Apple does have a path to share price improvements and earnings growth, Hall said. The Street's longer-term iPhone revenue growth estimate of 2 percent in fiscal 2019 and fiscal 2020 is below Goldman Sach's 5-percent estimate.

Another aspect of Apple's longer-term growth story comes from the company's ability to increase its stock buyback to $192 billion from fiscal 2018 through fiscal 2020 and simultaneously boost its dividend payout, and the potential for "more meaningful" M&A activity, Hall said. 

It would be "difficult for the stock to outperform" at current levels in the near-term given a poor outlook, the analyst said. But the likelihood of Apple delivering "significant" upside to the Street's revenue and EPS forecasts in fiscal 2019 and 2020 could "help support valuation as longer-term shareholders look beyond the near-term dynamics," Hall said. 

Price Action

Shares of Apple were trading lower by 0.69 percent at $161.90 Wednesday morning. 

Related Links:

Analyst: Apple's Stock 'Represents A Healthy Buying Opportunity' Right Now

Munster Still Likes Apple Even As Peers Downgrade

Photo courtesy of Apple. 

Latest Ratings for AAPL

Dec 2018Morgan StanleyMaintainsOverweightOverweight
Dec 2018RosenblattMaintainsNeutral
Dec 2018HSBCDowngradesBuyHold

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Goldman Sachs iPhone iPhone Demand iPhone SupercycleAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (AAPL)

View Comments and Join the Discussion!

Latest Ratings

BAPItau BBAUpgrades274.0
DVNJP MorganDowngrades37.0
EOGJP MorganUpgrades118.0
EXPDGoldman SachsDowngrades68.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Twitter Earnings Preview: Revenue And User Growth In Focus

Buckle Your Belt: Wild Ride Continues As VIX Remains Up, Stocks Face Pressure