Deutsche Bank and CLSA are approaching Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) from divided stances. While one analyst is not buying into Apple and all of its iPhone X-infused hype, another analyst is saying three cheers for Amazon as Amazon Web Services continues to seize the lead in the competition. Let’s dive in:
Apple Has Captivated the Street with iPhone X Talk- But Are Expectations Overblown?
Deutsche Bank analyst Sherri Scribner joins the hot topic conversation regarding the forthcoming iPhone X from Apple from the sidelines, believing the attention engulfing the tenth anniversary edition model with a rumored $1,000 price tag is vastly overblown. Though Scribner does increase her price target, the boost is far more a reflection of a rise in multiples rather than her confidence on the stock.
Therefore, not giving sway to those beating the drum for the tech giant, the analyst reiterates a Hold rating on shares of AAPL while lifting the price target to $125, which represents an 8% downside from where the stock is currently trading.
As far as Scribner is concerned, “The market continues to be optimistic on iPhone sales this year based on the expected launch of a 10th anniversary iPhone and the belief that the installed base is ripe for an upgrade. We remain more cautious, given slowing global smartphone growth, elongating refresh cycles, and the expected high price of new models.”
Moreover, the analyst continues, “As highlighted in today’s Global iPhone supply chain report ‘iPhone 8, too good to be true?’ new features point to higher bill-of-material costs and ASPs for the supply chain, but unit growth will likely only be in the mid-to-high single digits. We are raising our PT on higher market multiples but given the recent runup in the shares, we see current valuation as fair.”
“We continue to believe that these high prices will limit demand. […] Clearly, Apple is doing well selling high-end phones, and this should benefit their ASPs in 2017, but the vast majority of consumers can not afford to pay $1,000 for a new phone […]” Scribner concludes, keeping her wary eyes on the tech giant despite those on the Street cheering the upcoming high-end model.
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, four-star analyst Sherri Scribner is ranked #435 out of 4,496 analysts. Scribner has a 65% success rate and realizes 11.8% in her annual returns. When recommending AAPL, Scribner yields 11.7% in average profits on the stock.
TipRanks analytics demonstrate AAPL as a Strong Buy. Out of 35 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock and 7 remain sidelined. With a return potential of nearly 4%, the stock’s consensus target price stands at $141.69.
Amazon Web Services Continues to Be Amazon’s Strong Suit
CLSA analyst James Lee approaches Amazon stock from a surge in bullish perspective, largely thanks to Amazon Web Services firing up and ready to incite prospective consumers to opt into buying more elaborate services from the online and e-commerce leader, including databases.
On back of strong AWS demand and acceleration, the analyst likes the company’s odds to “up-sell” and reiterates an Outperform rating on AMZN with a price target of $950, which represents a just under 11% increase from where the shares last closed.
Lee notes, “Our cloud consultant expects cloud migration to accelerate from 5% of workload in 2016 to 20% in 2017, driven by cost savings from infrastructure services. This is consistent with an industry study indicating that labor, faculty and hardware costs make up 50%+ of the IT budget for data centers. AWS leads in contract wins due to its robust product portfolio at 150 key features vs 40 for Microsoft and 15 for Google. Besides financial services, the consultant is seeing opportunities in telecom, cable and healthcare.”
Furthermore, not only is AWS a key asset for Amazon, but it also is outclassing the competition. “AWS is leading peers in new contracts due to its robust product portfolio. […] AWS has 150 critical products/features compared to Microsoft at 40 and Google at 15. To consistently win new enterprise contracts, the cloud computing provider needs at least 50 critical product sets in contract bids,” asserts Lee.
With Cloud Technology Partners highlighting meaningful opportunity as rival Oracle Corporation (NYSE:ORCL) customers have indicated interest to switch from Oracle to Amazon’s database system and the company’s edge in Platform-as-a-Service (Paas) business) over the bulk of its competition, the analyst paints a confident picture for the leader moving forward.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst James Lee is ranked #459 out of 4,490 analysts. Lee has a 79% success rate and garners 15.6% in his yearly returns. When recommending AMZN, Lee gains 38.5% in average profits on the stock.
TipRanks analytics exhibit AMZN as a Strong Buy. Based on 29 analysts polled by TipRanks in the last 3 months, 28 rate a Buy on AMZN stock while 1 maintains a Hold. The 12-month average price target stands at $940.46, marking a nearly 10% upside from where the stock is currently trading.