Apple Inc. (NASDAQ:AAPL) has taken its investors for quite a rollercoaster ride. The stock price of the iPhone maker has flirted with the $700 mark, and is now down substantially and is hovering around the $450 mark. Momentum investors have dumped the shares in large numbers amidst worries of margin contraction, and a slower pace of innovation.
While it’s never a good idea to follow marquee investors blindly, it’s a good idea to engage in “fact-checking” with leading investors and thought leaders once in a while. Investors should do their own research on Apple Inc. (NASDAQ:AAPL) before jumping on the boat, and even more so, due to the uncertainty surrounding the company. With that being said, let’s take a look at what some leading investor groups or thought leaders are saying about Apple Inc.
Valuation Guru: Apple is worth at least $600
A self-proclaimed Apple Inc. (NASDAQ:AAPL) fan, Aswath Damodaran is a very well-known and prominent figure in the financial industry. Aswath Damodaran is a corporate finance and valuation professor at New York University (NYU), and also teaches valuation to new MBA Associates at various bulge bracket Investment Banks. In addition, he is also a well cited author, and the publisher of numerous equity valuation books and one of the most respected professors in the U.S.
Damodaran was a buyer of Apple Inc. (NASDAQ:AAPL) stock in 1997 and sold off his stake in early 2012 at a price of $600+, with capital gains most people can only dream of. After a huge sell-off on Apple, Damodaran bought back Apple shares in Jan 2013, at less than $500 and cited that Apple is worth $609.
Professor Damodaran values the company at $609/share using a Discounted Cash Flow (DCF) Analysis that utilizes a cost of capital of 12.5% and a terminal growth rate of 1.8%. He also reiterated his opinions on Apple Inc. (NASDAQ:AAPL) stock at a recent media appearance earlier this month.
Apple in Goldman Sachs Group, Inc. (NYSE:GS)’s “Conviction Buy List”
After Apple’s Q1 Results, Goldman Sachs Analyst, Bill Shope, slashed down his Apple price target to $660 from a previous $760, citing worries about management’s guidance. More importantly, Apple Inc. (NASDAQ:AAPL) sits in Goldman’s Conviction Buy List, which is a list comprised of stocks which the investment bank states as having a very high probability of achieving strong returns.
Goldman expects that new products in the coming months will accelerate user growth for Apple products, and also cites that there is already a strong and sticky fan base for the company’s products and reiterated its Conviction Buy rating.