BMO Capital Raises Apple’s Price Target and EPS Estimates

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Source: Thinkstock

Source: Thinkstock

Apple’s (NASDAQ:AAPL) attractive valuation and potential for new revenue streams continues to drive bullish analysts to revise their earnings estimates and price targets on the Cupertino-based company’s shares. In a recent note to investors, BMO Capital analyst Keith Bachman raised his price target on Apple shares to $565 from $560 and reiterated an “Outperform” rating.

“We continue to believe that AAPL’s valuation is attractive relative to historical measures as well as relative to the S&P 500,” wrote Bachman in a research note obtained by The Economic Daily. “Based on changes in the multiple, we believe that the upside case is in the $635 range and the downside case is in the $470 range. We are raising our March quarter EPS estimate to $10.23 from $10.16 (consensus of $10.14).”

The BMO Capital analyst cited Apple’s accelerated share buyback program as the primary reason for raising its earnings-per-share estimates. In February, Apple CEO Tim Cook revealed in an interview with The Wall Street Journal that the company had repurchased $14 billion of its own shares soon after it announced its fiscal first quarter earnings. “We are raising our EPS estimates on Apple, driven by aggressive share buybacks,” wrote Bachman according to The Economic Daily. “Apple repurchased approximately $14 billion worth of stock, and we assume that the share count declines by around 22 million, to 880 million shares in the March quarter. In addition, we assume total share buybacks of about $35 billion in FY2014 and FY2015, compared with $40 billion over the past 12 months.”

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