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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Bill from Wisconsin who wrote (191070)	6/7/2016 8:24:25 AM
From: Moonray	5 Recommendations Recommended By Bill from Wisconsin david1951 Doren NAG1 slacker711 Read Replies (1) \| Respond to of 213181

Apple (AAPL) Downside is Limited Based on DCF Scenario Analysis, Upside Significant - UBS June 7, 2016 8:14 AM EDT UBS analyst Steven Milunovich reiterated a Buy rating and $115 price target on Apple (NASDAQ: AAPL), saying their DCF scenario analysis suggests limited downside with significant upside. Milunovich commented, "Apple expert Horace Dediu recent told us, "As Apple is priced today, it’s assuming the ecosystem will erode because we cannot justify the 800mn users paying $300 a year continuing in perpetuity. The current price assumes either the $300 goes to $30 or the number of users goes from 800mn to 200mn in a few years." To test this, we ran a DCF model on six Apple scenarios, from very bearish to quite bullish. We found significant downside only in a BlackBerry situation in which iPhone units fall precipitously. The stock appears about fairly valued on weak future iPhone sales. However, if new products are 25-50% as successful as the iPhone, a high bar, we estimate there is upside to $130-160." The analyst notes investors currently seem to be pricing in flat to down iPhone sales and moderate support from services revenue, which appears reasonable over the near term. "Our most bearish case is a Blackberry-like fall from grace, putting the stock around $70. If iPhone goes the way of the PC at 5-10% annual declines, the stock could be worth about today's price. Given the size of the iPhone and historical difficulty in maintaining hardware margins, this is a reasonable possibility though probably too negative." Meanwhile, upside potential mostly depends on substantial hardware hits. "Significant upside requires either outstanding services growth, which we think ultimately depends on hardware, or new product hits," he commented. "Scenario 4 assumes new hardware product(s) with success equal to about 25% of iPhone revenue, resulting in a stock price of $130-150. Scenario 5 assumes products equal to 50% of iPhone revenue, likely reflecting a big win in virtual reality, which could take the stock to $140- 165. Scenario 6 is scenario 4 plus a successful Apple Car, which could support $170-195 per share." o~~~ O