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Apple Rebounds After UBS Price Target Boost to $142 a Share

UBS analyst David Vogt argues stable iPhone demand, as well as the tech giant's move in to self-driving vehicles, should support earnings growth.

Apple Inc.  (AAPL)  shares moved higher Wednesday after analysts at UBS boosted their price target on the world's most valuable tech company, citing stable iPhone demand and its potential move into the electric vehicle market.

UBS analyst David Vogt lifted his rating on Apple to 'buy' from 'neutral' while moving his price target $27 higher to $142 per share, arguing that stable iPhone demand and higher average selling prices will support near-term earnings growth. Apple's investments in self-driving cars, which have received significant media interest but have yet to be confirmed by Cupertino, could be worth "at least an incremental $14/share", Vogt argues. 

Apple shares were marked 2.35% higher in early trading Wednesday to change hands at $122.7 each. The stock, however, remains one of the worst-performing Dow components of the year after falling 7.5% amid the ongoing rise in Treasury bond yields and questions over the impact of semiconductor supply shortages brought by the coronavirus pandemic.

Foxconn  (FXCNY) , Apple's biggest and most important supplier cautioned yesterday that a 'materials shortage' could hit its supply chain in the coming months, a view that echoes similar concerns expressed by Samsung Electronics, the world's largest chipmaker, which warned that the global shortage in semiconductor supplies has created a "serious imbalance" that is affecting production in everything from smartphones to electric vehicles.

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Another key Apple supplier, Taiwan Semiconductor Mfg. Co. Ltd.,  (TSM)  , said in early January that the expected increase in global chip demand, driven by work-from-home dynamics that boost computer purchases and cloud storage needs as well as 5G network rollouts that will trigger smartphone upgrades and will likely power revenue growth for at least the next five years. 

Apple said on January 27 that it sees revenue growing on an year-on-year basis, but declined to provide detailed guidance for either sales or bottom line earnings. Gross margins, Apple said, will likely be flat on a quarter-to-quarter basis.