Apple Could Hit $75 In Market Disruption Scenario, But More Likely To Stay Range-Bound: Analyst

Apple Inc. (NASDAQ: AAPL) shares are stuck below $100 a day after Goldman Sachs reiterated its bullish thesis on the company. Last month, several Wall Street firms lowered their iPhone sales estimates for the company, citing macro weakness and warnings from peers in the smartphone space.

On Wednesday, Raymond James' Tavis McCourt maintained a Market Perform rating on Apple with no price target. McCourt's said his estimates are "well below" consensus for the company's March quarter, adding that he sees year over year EPS growth as "unlikely" for several more quarters, leading to a "range-bound" stock.

What About Apple's Valuation?

Here are four things the analyst said about Apple's current valuation:

1. "AAPL shares have generally underperformed the large-cap tech universe since 2Q15, and now trade at ~11.5x CY16EEPS,a ~25% discount to the median of this large-cap peer group."
2. "Companies growing revenue and EPS 5%+ are generally trading at P/E multiples higher than the S&P 500,while companies with flat-to-declining EPS have a median P/E of 12.2x."
3. "The last time Apple’s EPS was down y/y, the valuation troughed at slightly below 6x TTM P/E ex cash, which would equate to ~$75 today, but the S&P 500 multiple was much lower at that point."
4. "Barring a major economic and market disruption, we do not foresee AAPL shares getting to this level [$75]."

Updating Model

The analyst also updated his iPhone sales estimates. He sees a "rather severe channel inventory correction in March" and single-digit year over year growth in the June and September quarters. A "successful" iPhone 6C could give upside to these numbers.

McCourt is projecting $8.57 in full year GAAP EPS in FY2016 and $9.14 in GAAP EPS the year after, down from previous projections of $9.16 and $9.88.