Analyst: Apple's Stock 'Represents A Healthy Buying Opportunity' Right Now

Apple Inc. AAPL's earnings report prompted some Wall Street analysts to downgrade the stock, but some among the Street aren't shying away from taking the other side of the trade.

The Analyst

Hilliard Lyons' Stephen Turner upgraded Apple's stock from Long-Term Buy to Buy, with a price target lifted from $192 to $194.

The Thesis

Apple's stock is now trading lower since the start of 2018 and this represents a "healthy buying opportunity," Turner said in a note. The incrementally bullish stance is based on looking at the stock on a 12-month investment time frame instead of the analyst's prior 24-month view.

Apple is expected to grow its earnings per share by 26 percent in 2018 and another 9 percent growth in fiscal 2019. Beyond next year, it's possible that the market is "significantly" undervaluing the stock's long-term potential as the company's cash balance of $285 billion could be "deployed beyond our current estimate."

Excluding Apple's cash hoard, the stock is only trading at a forward P/E multiple of 10.2 times on Turner's fiscal 2019 EPS. Even when accounting for cash on hand, the stock's multiple is just 14 times, which implies the Street is "skeptical" Apple can achieve the analyst's targets.

Apple's status as a core holding for investors who want capital appreciation combined with a growing income stream remains unchanged.

Price Action

Shares of Apple were trading marginally higher Monday afternoon amid a broad selloff in the markets.

Related Links:

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Munster Still Likes Apple Even As Peers Downgrade