AAPL) inches closer to a $2 trillion market-cap valuation, a BofA analyst just downgraded the stock to Neutral, noting “risks should not be ignored.”
quarterly results which smashed Wall Street expectations. Shares have recently been trading at all-time highs.
“We are downgrading shares of AAPL to Neutral as we view risk reward more balanced at these levels,” wrote Wamsi Mohan in a note to investors.
The downgrade is accompanied by a price target increase from $420 to $470, “which assumes low-single digit year over year revenue growth and flat margins.”
Apple shares were trading relatively flat on Wednesday, hovering around $437 after several sessions of back-to-back gains. Year-to-date the stock is up 49%.
^GSPC) in 10 years.
“Shares have experienced a rapid multiple expansion (5 multiple turns),” while calendar 2021 estimates have largely been unchanged, wrote the analyst.
Mohan sees risks to product gross margin pressure from a higher bill of material costs for the 5G iPhones along with “tough compares in 2021 from an unsustainable trajectory (30% growth) of high margin App Store growth.”
hit with questions about the dominance of the company’s App store.
Mohan highlights the potential risk of anti-trust regulation on the App Store and the possibility of “a higher tax rate in the event of a democratic win in the US elections” in November.
The analyst also cites “lower impact from share buybacks.”
Last week the tech giant announced a 4-1 stock split and reached all time highs as investors digested the earnings.
The analyst notes scenarios in which his team “could be wrong,” including a stronger-than -anticipated cycle from 5G iPhones, gross margin upside, and a weak dollar which could cause incremental upside.
the company said during its earnings call could be delayed by a few weeks.
@ines_ferre” data-reactid=”58″>Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
Bearish Tesla analyst explains why shares could surge to $2,070
NIO share price reflects ‘over-optimism’: Goldman
Why Nikola shares ‘look attractive’ long-term: JPMorgan analyst
Tesla’s most bullish analyst sets a Street-high price target of $2,322
Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.” data-reactid=”63″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.
