If you like Apple now, you may just love it a year from now should it hit $110 per share.
That’s where Barclays analysts Ben A. Reitzes and Ryan Jones believe the stock will be in 12 months. On Monday, they upgraded the stock to “overweight” from “equal weight,” writing:
“We believe Tim Cook has solidified his strategy and regained the confidence of Apple stakeholders in many way–reversing many of the warning signs we saw earlier in the year. Second, Samsung’s weakness creates a large unforeseen buffer. Third, our checks around new products (builds, demand & quality) into 2015 are so strong, we are compelled to get on board even if it’s midway through the rebound trade.”
Though Apple is 38 years old, Reitzes and Jones believe Apple is hitting an inflection point similar to that of another large tech name. “Longer term, instead of Microsoft-like stagnation, we see parallels in the Apple story of today with Google’s story a few years ago,” they write. “We don’t believe that Apple can get quite to Google’s multiple, given it is still a hardware company with risk of a peak in margins after this product cycle. That being said, Apple is likely to introduce more recurring services and monetize its iTunes/App Store bases better with payments and other services.”
Gina Sanchez, founder of Chantico Global, believes Barclays $110 price target for Apple is a bit aggressive.
“Consensus is around $100 to $102,” said Sanchez, a CNBC contributor. Despite anticipation for a potential iWatch and iPhone 6, “Apple still has to meet some pretty lofty expectations, particularly in sales in China.... They have yet to really gain significant share there.”
However, the technicals on a one-year chart show the $100-per-share mark has a magnetic pull on the stock price even it breaks above it for a short time, according to Richard Ross, global technical strategist at Auerbach Grayson.
“When I look at this chart I’m pumping the brakes a little bit,” said Ross, a “Talking Numbers” contributor. “Yes, I think we can get to $100. You can even get a break out there [and] maybe even see that $110 target. So, for shorter-term traders that are playing the momentum, you can buy the stock. But I don’t think this is a compelling entry point for long-term investors.”
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Ross notes that the 28 percent gain in the stock price since April effectively added the equivalent in market cap of Intel or Qualcomm. “That’s too much too soon, for me,” he said. “There’s a pull to $100; sure, we can get there, no problem. But, I’m not chasing the stock, here.”
There may also be fundamental issues that keep Ross away from the stock. “Our analysts in Taiwan are coming out with a report saying that there could be production bottlenecks for the bigger screen–the 4.7 and the 5.5 [inches]–and, potentially, a production delay in that iWatch,” he added. “So, yes $100, maybe $110. But don’t chase the stock for a long-term investor.”
To see the full discussion on Apple, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.