UBS analysts chimed in today with favorable reports on tech giant Apple Inc. (NASDAQ:AAPL) and Buffet’s financial giant Berkshire Hathaway Inc. (NYSE:BRK.A), as they believe both companies should overcome their challenges and poised to outperform. Let’s take a closer look.
UBS analyst Steven Milunovich was out pounding the table on Apple, reiterating a Buy rating and price target of $120, which represents a potential upside of 14% from where the stock is currently trading.
Milunovich noted, “We look for about 10% iPhone growth in F17 as the iPhone 7 prompts a return to a normal upgrade cycle. The disruptive attack from below historically has hurt leading hardware companies, but we think Apple’s brand, product differentiation, and ecosystem protect it. Apple could be described as an annuity business model delivered as hits. But perhaps the best way to understand the company is as a platform in which software and services subsidize hardware sales.”
“Apple is valued as a traditional legacy vendor, likely underestimating its optionality. At under 10x ex-cash and with little implied long-term growth, the stock trades at a valuation similar to legacy pipeline computer companies. Although Apple does have the challenge of growing a huge top line, it has the advantage of an 800mn user installed base and platform economics, which could lead to sustained single-digit revenue growth, high margins, and P/E expansion,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Steven Milunovich has a yearly average return of 0.4% and a 39% success rate. Milunovich has a 1.8% average return when recommending AAPL, and is ranked #1788 out of 3812 analysts.
Out of the 52 analysts polled by TipRanks, 39 rate Apple stock a Buy, 10 rate the stock a Hold and 3 recommend to Sell. With a return potential of 29%, the stock’s consensus target price stands at $136.34.
Berkshire Hathaway Inc.
UBS analyst Brian Meredith initiated coverage on shares of Berkshire Hathaway, with a price target of $244,500, which represents a potential upside of 15% from where the stock is currently trading.
Meredith emphasized his positive stance on Berkshire Hathaway, noting, “We believe that the current uncertain economic and market environment plays into the hands of BRK, with its structural advantages of permanent capital, strong cash generation and industry-leading portfolio of businesses. This enables BRK to make acquisitions and/or invest in its operating units despite challenging environments, positioning it to grow earnings and book value faster than the S&P 500. We believe this will ultimately lead to multiple expansion for BRK’s shares, which are currently trading well below their historical price/book multiple.”
The analyst continued, “While the outlook for P&C Insurance overall remains challenging, BRK is well-positioned, as we expect GEICO to benefit from moderating auto claims frequency in 2016, resulting in improved combined ratios and acceleration in policies-in-force growth. Also, BH Primary should be one of the biggest beneficiaries of the reunderwriting initiatives at AIG and Zurich.”
According to TipRanks.com, analyst Brian Meredith has a yearly average return of 12% and a 86% success rate. Meredith is ranked #521 out of 3742 analysts.
Out of the 4 analysts polled by TipRanks, 3 are bullish on Berkshire Hathaway stock a Buy, while 1 remains sidelined. With a return potential of 12%, the stock’s consensus target price stands at $237,992.