Apple Company Research Paper

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          Equity & Fixed Income Course

Valuation Report

Novartis

Komal |Olga |Arlene |Neha

Date: 17/11/2017[pic 3]

Current Price: $163.05

Recommendation: Sell

Ticker: AAPL.NYSE

Target Price:  $137

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 NOVN

Summary

We issue a            recommendation for Novartis at the current market price of $. Our target price for Novartis  is $137 from a discounted cash flow valuation. This is a  downside/upside from the current price and we expect the target price to fall/increase.[pic 7]

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Highlights

Apple designs, manufactures and markets personal computers and related personal electronic devices. It also provides related software, services, peripherals and networking solutions. Apple sells its products worldwide through online stores, retail stores, direct sales force, 3rd party wholesalers and resellers.

Apple can also be viewed as a vertically integrated marketing company which sells luxury fashion accessories. Apple has transformed from a personal computer company to a mobile device company and now needs to transition into an ecosystem service provider. The key question for the valuation of Apple is can they be successful or will they struggle like IBM struggled to adapt to PCs and Microsoft struggled to adopt to the internet.

Saturated Smartphone Market – iPhone sales are the main driver of profitability for Apple. The global smartphone market appears to have plateaued requiring Apple to gain market share in an increasingly crowded market to increase sales.

Declining Market Share in China – The China market is an important one for Apple and they have been losing significant market share to local manufacturers. Local companies are offering comparable products at a lower price and we expect Apple to continue to lose significant market share in the future.

Stagnant Sales in Asia – Sales for Apple in the Asia region (excluding China) appear to be stagnating.

Stagnant Mac Sales – Over the past decade Apple has seen a lot of growth in the sales of Macs as consumers have purchased iPhone and become users of the Apple ecosystem. As iPhone sales growth has slowed the sale of Macs has stagnated and due to a much longer product lifecycle, sales now appear to be decreasing.

Declining iPad/iPod Sales – iPod and iPod sales are declining as a result of cannibilsation by iPhone and Mac sales as well as increased competition. The rise of the smartphone has largely made iPods redundant and they are no longer an important source of revenue for Apple. There has been a trend toward larger smartphones and this is likely contributing to cannibalisation of iPad sales for Apple.