Goldman Sachs’ Rod Hall on Apple stock: ‘it’s still pretty expensive’

on May 13, 2022
  • Goldman Sachs analyst says Apple down 23% YTD is still pretty expensive.
  • He explains why it could be difficult for Apple Inc to expand its multiple.
  • Rod Hall reiterated his "neutral" rating on the iPhone maker on Friday.

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Apple Inc (NASDAQ: AAPL) is a great company albeit one that’s “struggling to grow”, says the senior equity analyst for Hardware and Communications Technology at Goldman Sachs.  

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Why Rod Hall doesn’t find Apple attractive

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AAPL is now down more than 20% for the year but the sell-off didn’t make the stock any more attractive for Rod Hall. Explaining why on CNBC’s “Squawk on the Street”, he said:

From a valuation point of view, Apple is still pretty expensive. The S&P is trading at 16 times 2023 earnings. Apple’s trading at 24-25 times. That’s still a bit over 50% premium. So, it’s very expensive relative to the S&P.

The iPhone maker lost its crown as the world’s most valuable company to Saudi Aramco earlier this week. Once the only $3.0 trillion company, Apple now has a market cap of $2.35 trillion.

Inflation continues to be a headwind for Apple

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In April, Apple reported strong results for its fiscal second quarter in the face of a challenging operating environment. But that could change if inflation sees the consumer lose their strength.

If the consumer was to weaken in Europe and the U.S, that wouldn’t be great news for Apple. Plus, subscriber base is quite maximized, growing at GDP type growth rates in ARPU. If anything, it’ll probably trade down from here.

Coming out of the pandemic, therefore, it’ll be that much harder for Apple to grow, which doesn’t mean good things for the multiple, he concluded. Hall rates the stock at “neutral” with a price target of $157.

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