Credit Suisse Lifts Price Target on Apple Inc. (AAPL), Says Hold Your Horses on Starbucks Corporation (SBUX)


Credit Suisse analysts are chiming in with confidence on Apple Inc.(NASDAQ:AAPL) following iPhone analysis, but caution amid politically incensed reactions to Starbucks Corporation’s (NASDAQ:SBUX) decision to bring 10,000 refugees to the workforce between now and 2022. Whereas Apple’s upcoming iPhone cycle merits a price target raise from one analyst’s perspective, Starbucks’ suffering same-store sales leave another analyst firmly rooted in skepticism. Let’s take a closer look:

Apple Long-Term EPS Power Looks Promising

Credit Suisse Kulbinder Garcha sees compelling valuation for “inexpensive” Apple shares and therefore reiterates an Outperform rating on shares of AAPL while boosting the price target from $150 to $160, which represents a 15% increase from where the stock is currently trading.

“First our Asia team has noted a slight cut to production near term with iPhone builds dropping to 47mn in March and at 40mn in June. This compares with our iPhone estimate of 54mn/45mn. Given the timing between production and shipments we remain comfortable with our estimates. Second, the initial indication for the iPhone 8 units at 100mn to 110mn would suggest moderate growth. While we expect continuous revisions to this number at this stage, the builds plan is reassuring with growth directionally. Third, OLED mix could be as high as 70%. At this stage this number will be subject to variation, and we believe this is a very high number versus history (by contrast the iPhone 7 plus accounted for 40% of newer model shipment in CY16). It does however confirm our thesis that in a scenario in which three phones are introduced, the mix shift to highest end could be material, which could add a further $1.00 to long term EPS power,” Garcha surmises.

Looking ahead, the analyst maintains his iPhone forecasts at 233 million, 249 million, and 264 million, respectively.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Kulbinder Garcha is ranked #361 out of 4,517 analysts. Garcha has a 59% success rate and realizes 8.5% in his annual returns. When recommending AAPL, Garcha yields 19.2% in average profits on the stock.

TipRanks analytics demonstrate AAPL as a Buy. Out of 37 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 7 remain sidelined, and 2 are bearish on the stock. With a return potential of 5%, the stock’s consensus target price stands at $146.14.

Starbucks Net Sentiment Takes a Hit

Starbucks CEO Howard Schultz announced at the end of January of the caffeine giant’s new intent to hire 10,000 refugees throughout the next five years. However, are customers less than enthused in today’s politically immersive atmosphere regarding the hot button topic?

From the eyes of Credit Suisse analyst Jason West, the news “could have upset some customers, perhaps negatively impacting sales trends.” As such, the analyst remains sidelined on the giant’s same-store sales, reiterating a Neutral rating on SBUX with a price target of $55, which represents a just under 1% increase from where the shares last closed.

“We have analyzed online ‘net sentiment’ data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. […] Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~+80 (on an index of -100 to +100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from +3% in F1Q17 (Dec. qtr.) to ~+3.5% in F2Q and ~+5.5% in 2H1,” West contends.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Jason West is ranked #383 out of 4,517 analysts. West has a 70% success rate and earns 9.6% in his yearly returns. When recommending SBUX, West garners 27.3% in average profits on the stock.

TipRanks analytics exhibit SBUX as a Buy. Based on 18 analysts polled by TipRanks in the last 3 months, 12 rate a Buy on Starbucks stock, while 6 maintain a Hold. The 12-month average price target stands at $63.47, marking a 16% upside from where the stock is currently trading.

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