Apple Inc (AAPL)

[NewMoney]

There's a Path for Apple to Soar to $500 a Share, Analyst Says -- Barrons.com

Undeterred by Covid-19, Apple bulls think the company's long-term story remains as bright as ever.

Sure, the company (ticker: AAPL) withdrew its financial forecasts for the March quarter. And yes, demand is likely to be soft for the next few quarters, as the economic downturn takes a toll. And, certainly, the launch date of the 5G iPhone isn't at all clear. But the bulls still see the potential for dramatic gains, once the pandemic fades into history.

In a note issued over the weekend, Evercore ISI analyst Amit Daryanani reiterated his Outperform rating and $325 target price on Apple shares. He wrote that there is "plenty of upside ahead," and laid out a path to a stock price of $500 .

Keep in mind that his target isn't $500 . No analysts on the Street have a current target as high as $400 . But in the note, he lays out an "upside case" that could get the stock to that nice, round level.

Shares were at $278.01 , down 1.7%, on Monday afternoon.
For starters, Daryanani sees sustained double-digit sales growth both for wearable products and services, as Apple improves revenue per user. The upside scenario, he said, includes an uptick in product gross margins.

He also said his bull case reflects operating leverage, in contrast to his base case, which assumes that operating expenses outgrow sales. The bullish scenario includes an increase in Apple's valuation to 27 times earnings per share for the coming 12 months, a level he says is in line with other consumer luxury-goods stocks.

"Net/net," he wrote, "we think Apple continues to offer the best risk/ reward in large-cap tech and long-term investors should use any further Covid disruption to add to positions."

The stock is down less than 5% for the year to date, and has rallied 25% from the market's low point on March 24 .
Write to Eric J. Savitz at [e-mail]

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04-20-20 1542ET
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