J.P. Morgan: Apple's tumble is investor's opportunity

According to analyst Samik Chatterjee, an overly bearish scenario for 2019 is already priced into the stock.

From a note to clients that landed on my desktop Friday morning:

Amidst the noise around Apple relative to iPhone shipments, we believe it might be useful to outline our view on earnings sensitivity to three different factors that are on top of investor minds, including the implications of:

1. lower iPhone revenues;
2. lower Services revenue from softer installed base growth; and
3. a potential new 10% tariff on iPhones imposed by the US administration.

Interestingly, the -19% decline in the share price since F4Q18 earnings appears to have already priced in an overly bearish scenario of a greater than -10% volume decline in FY19E, the impact of multi-year volume declines on Services, and potential new tariffs.

However, based on our checks, we do not find a need to tweak our volume forecast (206 million/206 million in FY19E/FY20E) further at this time, and thus we see the recent share price decline as an opportunity for investors, as it sets a fairly low bar on AAPL shares trading at only 13.3x NTM P/E to drive upside for shareholders.

Maintains Overweight rating and $266 price target. 

My take: J.P. Morgan has been rock solid on Apple since Chatterjee took over from Rod Hall.