Needham slashes Apple price target, calls it a Buy

By Steven M. Peters Updated Jan 11, 1:27PM EST · Published Dec 20, 9:05AM EST

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“AAPL is the least expensive way to participate in several inexorable long-term economic trends.” — Analyst Laura Martin

From a note to clients that landed on my desktop Thursday morning:

We lower estimates and our 12-month price target to $200 (from $260). What worries us near-term about AAPL includes:

a) rising China revenue risk owing to trade tensions and/or Qualcomm litigation;
b) India – weak demand & falling iPhone market share;
c) rising interest rates – AAPL’s $112B of debt becomes more expensive; and
d) any offshore economic slowdown would hurt AAPL which targets only the wealthiest consumers globally.

We retain our BUY rating because we believe AAPL is the least expensive way to participate in several inexorable long-term economic trends:

a) growing consumer wealth globally;
b) consumers’ shift to mobile;
c) rising stickiness of AAPL’s ecosystem owing to new products and services, which drives upside to AAPL’s lifetime value per “subscriber”; and
d) a pristine balance sheet that can withstand virtually anything.

Maintains Buy, cuts price target to $200 from $260.

Below: Needham estimates.

My take: How to cut a target without drawing blood.

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