Apple Inc. (AAPL): Attractive Risk/Reward Ahead of Earnings, Says Piper Jaffray


Piper Jaffray analyst Michael Olson previews Apple Inc. (NASDAQ:AAPL) ahead of its first fiscal quarter of 2017 print due January 31st from a favorable risk vs. reward perspective, predominantly on back of hopes for the iPhone X, a.k.a. the iPhone 8, to “capture investor attention.” Additionally, the analyst highlights a positive services revenue trajectory.

As such, the analyst reiterates an Overweight rating on shares of AAPL with a $155 price target, which represents a 29% increase from current levels.

Olson opines, “While many investors are concerned that 1H FY17 iPhone estimates may prove aggressive, we expect near-term results in-line to slightly above consensus expectations. The pessimism among investors is largely based on perception that potential iPhone 7 buyers are holding out for the 10th anniversary device in Sept (iPhone X). Our survey of 1,000 U.S. iPhone owners suggests most are not aware of the potential for a 10th anniversary device with more significant upgrades later this year.”

“In summary, we do not expect a Dec/Mar qtr iPhone miss, but given proximity to iPhone X, any issues in 1H FY17 would likely be overshadowed by investor anticipation for iPhone X, providing a favorable risk/reward for AAPL,” Olson contends, adding that for this reason, “We believe the stock is well positioned through the next several quarters […]”

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 Michael Olson is ranked #140 out of 4,361 analysts. Olson has a 63% success rate and garners 11.9% in his annual returns. When recommending AAPL, Olson yields 3.4% in average profits on the stock.

TipRanks analytics exhibit AAPL as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 26 are bullish on Apple stock and 5 remain sidelined. With a return potential of 14%, the stock’s consensus target price stands at $136.83.

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