Piper Jaffray’s Top Picks: Apple Inc. (AAPL), Amazon.com, Inc. (AMZN)

As earnings season kicks off, Piper Jaffray analyst Gene Munster is weighing in on the technology giant Apple Inc. (NASDAQ:AAPL) and e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), and he is unsurprisingly bullish on both stocks.

Apple Inc.

Munster highlights Apple as his top large cap pick heading for the remainder of 2015 and into 2016 as investors begin to price in favorable trends that should emerge in 2016.

The analyst noted, “We expect the stock to benefit from three catalysts over the next year. First, we believe there is anticipation of a strong holiday quarter driven by first-time December-quarter products including Apple Watch, new iPad Pro, and Apple TV. Second, we expect the shift in upgrade policies by US carriers to provide a 3% tailwind to units over the next several years. As other countries follow the US lead, the tailwind should magnify to 5-7% per year for at least four years. Third, we think investors will soon begin to anticipate the iPhone 7 cycle, which could be a more revolutionary cycle.

The analyst reiterated an Overweight rating on Apple shares, with a price target of $172, which represents a potential upside of 55% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a total average return of 22.2% and a 65.1% success rate. Munster has a 25.5% average return when recommending AAPL, and is ranked #2 out of 3788 analysts.

Out of the 38 analysts polled by TipRanks, 28 rate Apple stock a Buy, 9 rate the stock a Hold and one recommend a Sell. With a return potential of 33%, the stock’s consensus target price stands at $147.69.

Amazon.com Inc.

With Amazon preparing to release its earnings results on October 22 after the market close, Munster weighed in with his forecast. The analyst reiterated an Overweight rating on AMZN stock, with a price target of $650, which represents a potential upside of 14% from where the stock is currently trading. According to TipRanks.com, Munster has a 34% average return when recommending AMZN.

Munster wrote, “We are shifting our view slightly from assessing the upcoming Sep-15 earnings announcement as a favorable risk/ reward to a neutral risk/reward. While we are maintaining our 12-month and longterm OW outlook, we believe that the effects of Prime Day are well understood by investors, our Amazon Search Index is now indicating 21-22% unit growth during the quarter, and margin expectations for Dec-15 are probably fairly realistic from a performance standpoint, but it is more difficult to know if guidance will fall in this range. Shares of AMZN are up 84% YTD vs the S&P at -1.3%, meaning significant expectations are baked into shares. As we examine the remainder of the year, we do not expect AMZN to materially outperform our other OW stocks and are therefore removing AMZN as our 2015 large cap Top Pick for the remainder of the year.”

Out of the 32 analysts polled by TipRanks, 29 rate Amazon stock a Buy, while 3 rate the stock a Hold. With a return potential of 12.5%, the stock’s consensus target price stands at $642.07.

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