The firm said that AAPL is their top stock idea for 2017, noting a Strong Buy rating and $150 price target. That target suggests a massive 30% upside to the stock’s Wednesday closing price of $115.19.
Needham said their bullish thesis is based on four major analytical building blocks: catalysts, fundamentals, technical analysis, and valuation. Possible catalysts for AAPL in 2017 include a falling corporate tax rate and repatriation of over $200B from cash balances offshore, spurred by president-elect Donald Trump’s new economic plans.
In terms of fundamentals, Needham lauds Apple’s high barriers to entry, pricing power, and competitive advantage period within its device and app ecosystem dominance that focuses on the wealthiest 15% of smartphone owners in the world. While Android may be installed on far more devices, iOS is the overwhelming choice among the world’s economic elite.
The firm also notes that Warren Buffett’s Berkshire Hathaway has been steadily adding shares of AAPL over the past year, and as of the end of September, Berkshire owned some 15.7 million shares. That’s about $1.7B worth of Apple stock in the Oracle’s portfolio, and history has shown that following him into positions usually works out pretty well.
Taking a look at all of the recent bullish analyst moves for Apple as of late, Needham’s $150 target is the second highest among all analysts we track. Only Drexel Hamilton’s $185 price target is higher.
Apple shares were unchanged in premarket trading Thursday. Year-to-date, AAPL has gained 9.43%, which is roughly in-line with the S&P 500’s ~11% return during the same period.
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