Apple Inc. (NASDAQ:AAPL) may have the rest of Wall Street’s enthusiasm about its forthcoming iPhone 8 launch, but Mizuho is simply not impressed enough, believing that with everyone’s predictions calling for a powerhouse performance, how much room for upside is left for the tech giant? Meanwhile, a top analyst weighs in on General Electric Company (NYSE:GE) amid its CEO transition and the industrial giant’s plans to transform its portfolio. Let’s take a closer look:
Apple Gets Downgraded
Apple is getting moved down to the sidelines, even as Mizuho analyst Abhey Lamba anticipates possibilities for a robust iPhone product cycle, believing expectations are so high chances for upside are narrowed. As such, even though the tech giant has soared on stellar performance thus far, the analyst downgrades from a Buy to a Neutral rating on shares of AAPL while taking the price target down from $160 to $150, which represents a 2% upside from where the stock is currently trading.
Even as Lamba downgrades the giant, he notes to “still expect [a] strong iPhone 8 cycle,” anticipating a “strong holiday season following into early next year.” However, the analyst breaks down his apprehensions on the stock, underscoring the following points: “A few things make us cautious on consensus FY18 numbers: 1) potential pull-in of demand creating tough comps in the following year; 2) growth driven primarily by replacements vs. net new customers, limiting expansion of installed base; 3) initial supply constraints due to complexities around product ramp; 4) potentially higher ASPs for high-end SKU driving demand elasticity; 5) risk to out-year gross margins.”
Overall, “The stock has meaningfully outperformed on a YTD basis and we believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside to estimates from here on out. Our sensitivity work indicates bull case EPS of around $11 which, along with a cycle-peak multiple, indicates limited upside to the stock. Our LTVC work suggests more muted gains as well. As such, we move to the sidelines despite our expectations of a strong iPhone 8 cycle,” surmises Lamba, who likewise anticipates short-term weakness to continue regarding China growth opportunities.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Abhey Lamba is ranked #335 out of 4,567 analysts. Lamba has a 67% success rate and earns 11.5% in his annual returns. When recommending AAPL, Lamba gains 30.6% in average profits on the stock.
TipRanks analytics show AAPL as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 26 are bullish on Apple stock while 5 remain sidelined. With a return potential of nearly 14%, the stock’s consensus target price stands at $165.48.
General Electric Has New CEO in the Front Seat
General Electric is in a time of leadership flux, with John Flannery taking over the steering wheel of the electric car giant come August 1st. Top analyst Christopher Glynn at Oppenheimer believes “portfolio preservation [is] likely,” but for now reiterates a Perform rating on GE without suggesting a price target.
Providing some back story, the analyst highlights, “Back in 2013, GE targeted summer of 2017 as the narrow time-frame for succession with a gradual narrowing of candidates, and consistent with targeted status of portfolio transformation […]”
“Flannery committed to a fall time-frame disclosure of priorities for his own strategic emphasis and (re)direction, downplaying the notion of any break-up prospects (clear leverage in branding, engineering, GE digital platform, supply chain), while playing up GE digital, cash production, cost optimization, and additive manufacturing, seemingly for updated nuance to come.”
Looking ahead, “LTSAs will remain a source of non-cash earnings long term, as GE grows the balance/demonstrates productivity gains. GE notes barely any historical reductions against LTSA productivity assumptions […] We also note GE could look at ways to monetize LTSAs (~10- year cash conversion life, vs. 12-18 months for most other contract assets),” contends the analyst, cautiously optimistic on GE’s prospects.
Christopher Glynn has a very good TipRanks score with a 73% success rate and a high ranking of #28 out of 4,567 analysts. Glynn garners 14.2% in his yearly returns. When recommending GE, Glynn realizes 17.1% in average profits on the stock.
TipRanks analytics demonstrate GE as a Hold. Based on 19 analysts polled by TipRanks in the last 3 months, 6 rate a Buy on General Electric stock, 7 maintain a Hold, while 6 issue a Sell. The 12-month average price target stands at $285.27, marking a nearly 21% downside from where the stock is currently trading.