Is $200 Price Target a Warning Sign for Investors?
Apple shares tumbled noticeably this week after Phillip Securities switched its recommendation from Neutral to Reduce. The downgrade occurred when the stock stood at $226.79, a price it reached after a sudden market-wide rally.
While the company still boasts a market cap of $3.37 trillion, the action highlights growing concern that the stock’s multiple has begun to exceed what the near-term results can support.
Phillip set a new price target of $200, implying a further drop of about 12 % in the short run. The target came from a discounted cash-flow model that uses a 6.5 % blended rate for both equity and debt, along with a 3 % long-term growth assumption.
The analysts say that the resulting multiples are far too high…
