Apple Stock May Reach Overvaluation

Apple Stock May Reach Overvaluation
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Apple stock may reach overvaluation in time, Matt Krantz of USA Today warns.


Citing data from S&P Capital IQ, Krantz said trading for shares of Apple is now at 17.2 times its diluted earnings per share over the past year.

At the rate that shares for Apple is currently trading, the stock is very close to the 18 times valuation. This is the very same valuation that brought problems to the stock in the past. The stock crumbled in Oct of 2012 after reaching 18 times its diluted earnings at that time, Krantz noted.

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He said that analysts who are currently bullish on Apple stock are already talking of an estimated price target of as much as $132.64. “If these analysts are right, that means the stock is already just about at what the stock is worth – in 18 months,” Krantz wrote.

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Apple Stock Price Target Raised

Meanwhile, the Global Equities Research increased their price target of Apple on Tuesday. Its price target for the stock is now $165 from $150, the second-highest share valuation given to the stock on Wall Street. The firm has also reiterated its Overweight rating on the stock.

The firm’s optimism on Apple stock was based on the foreseen market potential for Apple in India, with an estimated target market of 45-50 million people. The country has the potential to give Apple revenues amounting to $12.5 billion. The company could sell 14 million iPhones, 3 million iPads, 5 million Apple Watches and one million Macs in the country, Global Equities analyst Trip Chowdhry said.

Chowdhry said that there is now a more profitable market in India that the United States. He noted that Indian has 945 million people using mobile phones while the US has only 340 million. India was able to sell 80 million smartphones in 2014 while the US has only sold 170 million, Chowdry highlighted.

Apple stock price is now at $127.83 according to the data from Apple as of Feb 17 at 14:15 ET.