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7 Reasons Why BofA Is Raising Apple's Price Target As Stock Reaches New Highs

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7 Reasons Why BofA Is Raising Apple's Price Target As Stock Reaches New Highs

Although shares of Apple Inc. (NASDAQ: AAPL) Wednesday climbed to close at a new record high of $352.84, its valuation remains inexpensive, according to BofA Securities.

The Apple Analyst: Wamsi Mohan maintained a Buy rating on Apple and raised the price target from $340 to $390.

The Apple Thesis: Despite the appreciation in Apple’s stock, the Buy rating reflects the company’s continued penetration into its installed base, significant net cash position and continued strong capital returns, Mohan said in a Thursday note. (See his track record here.)

The analyst named seven drivers for Apple shares:

  • The company is set to begin 5G iPhone production, and the stock multiple typically expands as a product cycle begins. 
  • Product or hardware revenues, widely expected to remain flat, are now likely to grow 20% in 2021, driven by iPhone and wearables. 
  • Other large-cap tech companies carry more regulatory risks or face tougher compares, while Apple’s compares will get easier next year. 
  • Stability of cash flow. 
  • Continued insourcing and services mix may lead to gross margin expansion.
  • New product categories, including augmented reality glasses and health care. 
  • The market multiple has expanded by two turns from pre-coronavirus levels.

AAPL Price Action: Shares of Apple were down 3.44% at $340.69 at the time of publication Thursday.

Related Links:

Munster: Apple Is The Best Way To Invest In The '5G Cycle'

10 Biggest Price Target Changes For Thursday

Photo courtesy of Apple. 

Latest Ratings for AAPL

DateFirmActionFromTo
Aug 2020WedbushMaintainsOutperform
Aug 2020Wells FargoMaintainsOverweight
Aug 2020B of A SecuritiesDowngradesBuyNeutral

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