One Downgrades Apple, One Targets $1 Trillion Market Cap

BofA-Merrill Lynch raised its price target to the highest on Wall Street

Jan 17, 2018 at 10:20 AM
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Apple Inc. (NASDAQ:AAPL) has put in a strong technical performance over the long term, with the stock boasting a 46.8% year-over-year lead -- and fresh off yesterday's record high of $179.39. And while the bulk of the 29 analysts covering shares maintain a "buy" or better rating, Longbow Research issued a rare Apple downgrade this morning.

Specifically, the brokerage firm cut its rating on AAPL stock to "neutral" from "buy," citing a "good, not great iPhone cycle." Longbow Research also lowered its fiscal 2018 iPhone unit shipment forecast to 233 million from 248 million, well below the consensus estimate of 239 million.

Though the bearish note has Apple shares trading down 0.2% at $175.76, the stock did receive some upbeat analyst attention. Barclays, for instance, came in with a price-target boost to $174 from $162. Plus, BofA-Merrill Lynch raised its price target to $220 from $180 -- the highest on Wall Street, and representing expectations of a $1 trillion-plus market cap -- with the firm waxing optimistic over a potential cash repatriation of $240 billion, which it believes could be used for M&A, buybacks, or dividend hikes.

Options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been betting on more gains for Apple in recent weeks, with the stock's 20-day call/put volume ratio docked at a top-heavy 2.00. Those that are currently purchasing premium on near-term options are paying up, as elevated volatility expectations get priced in ahead of Apple's Feb. 1 earnings report. At last check, AAPL stock's 30-day at-the-money implied volatility of 27.1% was perched in the 98th annual percentile.


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