With futures looking ominously ungreen this morning, what better way to prop them up than to upgrade the stock that alone has contributed to 13% of the S&P's return YTD...
... Apple.
That'sprecisely what both BofA and Goldman have done this morning, with the former raising its 12-month price target to $170 from $164, "based on a target P/E of 15x (unchanged) and our CY18 EPS estimate of $11.38 (up from $10.91)."
The Catalyst for Goldman's upgrade: some hypothetical $1,000 phone. Because while half of Americans don't have $500 in savings, they apparently have unlimited funding when it comes to aspirational "upper middle class" status symbols, or so Apple - and now Goldman - think.
Here is Goldman's logic:
Ahead of the upcoming iPhone 8 product cycle in the fall, we take a look at the potential implications for Apple’s P&L from what we expect to be the first $1,000 iPhone. With this report, we introduce (1) a detailed iPhone model by SKU, (2) an iPhone ASP analysis, and (3) a gross margin analysis for FY18 (September). We also outline our expectations for the new features in the iPhone 8, including a 5.8” OLED display and 3D sensing. We expect the iPhone 8 to have 128GB and 256GB models priced at $999 and 1,099 respectively.
In other words, there was nothing at all in the company's existing projections that would prompt Goldman to find a reason to be optimstic, so it had to step in the shoes of the company's CFO and Treasurer, and imagine what a new and improved price for the iPhone 8 would be, in order to justify a $6 price target increase.
Good luck with that.