Tavis McCourt: I’m Cutting Apple’s Price Target, But Don’t Worry

Raymond James analyst Tavis McCourt may have cut his price target on Apple (NASDAQ:AAPL) shares from $700 to $690, but he retains an Outperform rating on the stock and sees no reason for immediate worry. McCourt cited an eventual slowdown in growth rate as one of the main reasons for trimming the price target, but continued to call the iPhone maker one of the most underpriced stocks on the market.

“We continue to view Apple’s growth rate as slowing, but still consistent with double-digit top line growth for the foreseeable future, and [earnings per share] growth improving as the fiscal year 2013 progresses,” the analyst wrote in a note to investors. “We view Apple as attractively valued given this outlook, which does not explicitly assume iPhone launches at any unannounced carriers or new product lines.”

Our 20-page proprietary analysis of Apple’s stock is ready. Click here to get your Cheat Sheet report now.

Apple’s holiday season was a strong one in terms of sale, according to the analyst. McCourt raised his December estimates for iPhone sales from 46 million to 48 million units, though he reduced estimates for the March quarter from 42 million to 37 million. He also raised his earnings per share estimate for the just-finished fiscal first quarter from $13.36 to $13.81.

McCourt sees no threat to the company’s ecosystem in the immediate future and credits his optimism on a strong revenue growth rate for the company’s iTunes and App Stores. “Apple’s revenue growth from its iTunes/App Store is a good proxy for the popularity of its ecosystem, and rather than slowing, it has accelerated in 2012 to more than 30 percent year-over-year, hardly a data point that would suggest erosion of ecosystem value,” he said. “As long as usage is growing in the ecosystem, this will drive future iPhone, iPad, iPod, Mac, and eventual TV sales.”

Don’t Miss: Why is Leon Cooperman Dropping Apple?