Goldman Sachs Bullish On Apple; Pullback Represents Buying Opportunity As Weak Guidance Is Priced In

• Apple Inc. AAPL shares are down 8 percent in the last one year and are currently trading close to their 52-week low of $92.
• Goldman Sachs’ Simona Jankowski maintained a Buy rating for the company, with a price target of $155.
• The recent pullback in Apple’s shares offers an attractive opportunity, with the company’s expected weak guidance already priced in, Jankowski stated.

Apple is expected to report F1Q [December] revenues at $76.8 billion and EPS at $3.28, marginally ahead of the consensus estimates. The company’s F2Q [March] quarter revenues and EPS are estimated at $57.1 billion and $2.30, respectively.

Analyst Simona Jankowski expects Apple to issue a conservative March quarter revenue guidance of $53-55 billion.

Indications of weaker iPhone sales have resulted in a 12 percent decline in Apple’s shares in December 2015, versus an 8 percent decline in the S&P and a 10 percent decline in the NASDAQ.

Jankowski believes that the current weakness in Apple’s shares offers a buying opportunity, given that the low guidance is already priced in, the defensive nature of the stock and the March quarter representing a trough in y/y revenue growth. Easing comps and the next product cycles are expected to drive revenue growth during the rest of the year.

The analyst expects Apple’s multiple to increasingly reflect the evolution to “Apple-as-a- Service,” as users shift to iPhone installment plans and adopt new products and services offered by the company.