JPMorgan analyst Samik Chatterjee raised his price target for Apple (AAPL) to $275 from $265 ahead of the company's fiscal Q4 earnings results on October 30.
The recent rally in the shares suggests that investor expectations are "primed for a robust" 2019 iPhone product cycle, followed by a stronger 2020, led by 5G replacement cycle, in combination with a reacceleration of Services revenues, Chatterjee tells investors in a pre-earnings research note.
Following a 56% rise year-to-date, the shares are now trading above their long-term average, and higher than the typical earnings multiple that investors are willing to attribute to Apple, "unless they receive reinforcement of the upside to consensus earnings when Apple reports later this week," says the analyst.
As a result, Chatterjee is not recommending investors add to positions heading into the print. Rather, he says use any share price weakness following the print to "double down on the multi-year earnings trajectory."
The analyst reiterates an Overweight rating on Apple.
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