Although Apple was the 2019 star of the Dow Jones Industrial Average, tech investor Paul Meeks calculates that the stock is worth much less than $290 a share.
“I value the company at about $170 a share, believe it or not,” Meeks, the portfolio manager at Independent Solutions Wealth Management, told CNBC on Monday (Dec. 30). “We’re talking about a company that based on my model is about $100 per share overvalued.”
Meeks said he would only consider buying Apple shares if they dropped a minimum of 40 percent from current prices.
“People are excited, perhaps too much so, as the company transitions from a hardware product iPhone-dominated company to … a software as a services company,” he said. “The stock is overpriced.”
Shares in Apple have skyrocketed 85 percent in 2019, with 20 buy ratings from analysts against six sell ratings and 10 neutral, according to FactSet, per CNBC.
“The iPhone business continues to deteriorate,” Meeks said. ”[It’s] very akin to the slowdown in maturity that we saw in the PC market as we kind of went from the ’80s to the ’90s.”
He expects that weak earnings reports over the next year will bring about a sharp market correction.
“The last time we saw nice growth in global smartphones was back in 2015,” he said. “It’s not healthy. It’s not a growth market.”
Apple is confident that strong sales of its Apple Watch and AirPods will be the ticket to drive up the company’s stocks in 2020.
Citi Analyst Jim Suva said watch sales will come as a “surprise” to investors during the first fiscal quarter of 2020, which will help Apple’s stocks continue to surge and move the company closer to Suva’s $300 price target.
On Monday (Dec. 30), Apple’s stock was up 0.5 percent at about $291 per share. The stock was up 84 percent this year overall, making it the best performer in the Dow Jones Industrial Average.