Analyst: Downside Q3 risk greater than upside opportunity

Asymmetry, thy name is Apple.

From a note to clients by BMO’s Tim Long that landed in my inbox today:

Upside Scenario $206.00: Our upside case for AAPL is $206, based on CY2019E EPS of $13.76 with a target multiple of 15x P/E. Our upside case includes an additional 100 bps of revenue growth and an additional 100 bps of margin expansion in CY2019 versus our base case assumptions.

Downside Scenario $163.00: By comparison, our downside case for AAPL is $163, based on CY2019E EPS of $12.54 with a target multiple of 13x P/E. This case assumes a 100-bp reduction of revenue growth and 100 bps less operating margin in CY2019 versus our base case assumptions.

Maintains Market Perform rating and $184 price target.

My take: Long’s target is one of the Street’s lowest, but this downside-upside asymmetry is conventional wisdom.

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