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Apple Cut To Hold At Merrill Lynch

Merrill Lynch downgraded Apple’s stock rating to Hold from Buy citing more balanced risk-reward at current levels.

However, Merrill Lynch analyst Wamsi Mohan lifted Apple’s (AAPL) price target to $470 (7.1% upside potential) from $420. Mohan believes that Apple shares are “already trading at the highest premium to SPX in 10 years and consumer staples multiples,” and he foresees multiple risks, including pressure on unit volumes and product gross margins.

On July 30, Apple reported better-than-expected earnings of $2.58, versus analysts’ estimates of $2.04 per share. Revenues of $59.7 billion also exceeded the Street estimate of $52.3 billion. The results were driven by “double-digit growth in both Products and Services and growth in each of our geographic segments,” according to Apple CEO Tim Cook.

The Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 24 Buys, 6 Holds, and 2 Sells. The average price target of $421.79 implies downside potential of 3.9% to current levels. (See AAPL stock analysis on TipRanks).

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Amit Singh
Amit Singh has over eight years of strong experience (both sell-side and buy-side) in analyzing financial reports and filings as well as identifying strategic investment opportunities. Over the years, Amit has covered various industries and geographies, with a primary focus on consumer staples and the consumer discretionary sector. Amit’s background spans evaluating company portfolios, building complex financial models, writing financial articles, and identifying the overall financial worth of companies. He has a post-graduate diploma in finance.

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