Apple (AAPL) PT Lowered to $120 at RBC Capial Post Q2
RBC Capital analyst Amit Daryanani lowered its price target on Apple (NASDAQ: AAPL) to $120.00 (from $130.00) following weak disappointing results and outlook but maintained an Outperform rating.
Daryanani commented, "The June-qtr guide was exceptionally disappointing but we think valuation provides support in mid 90’s near-term but for AAPL to sustain multiple expansion investors need to get comfort regarding iPhone 7 being a game changer and enabler of revenue acceleration. The big negatives from the EPS call were: 1) June-qtr guide down is material at 15% y/y decline, 2) Mix is a headwind: AAPL is seeing better uptick in low-margin/low-ASP iPhone SE while the high-end iPhone 6s/6s+ are both performing below plan, 3) China: Greater china revenues down 26% y/y though adjusted for a few factors its down 11% and 4) Gross-margins: AAPL expects gross-margins to decline by ~160bps q/q to 37.8%, while some of this is attributed to deleverage, the bulk of it reflects mix headwinds. From a stock perspective, as we lap the tough iPhone 6 compares and head into iPhone 7 launch, we should see return of growth in Dec-qtr that along with a modest uptick in gross-margins should enable AAPL to drive EPS growth (buybacks should also help). We are maintaining our OP rating and adjusting our target to $120 (prior $130)."
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Shares of Apple closed at $104.35 yesterday.