Apple broth (AAPL) – Get the Apple Inc. investors who like to follow price trends must have been very busy last week. The combination of renewed fears of COVID-19, monetary tightening and the alleged slowing in demand for the iPhone has caused the AAPL to rebound. Surprisingly, the stock still ended the week up 2%.
What should investors think of the deluge of news and recent developments impacting Apple stocks? Today we take a look at how three Wall Street analysts handled all of the information.
(Learn more about Apple Maven: Apple stock: slowdown in demand for iPhone or strong quarter ahead?)
iPhone 13: deadlines are improving
Based on the latest published sales reports, there seems to be a consensus: iPhone delivery times have improved. Wamsi Mohan of Bank of America provided some of the most detailed accounts on the availability of Apple smartphones during the holiday season:
“The availability of the iPhone 13 Pro and Pro Max appears to be more extensive than that of the iPhone 13 and 13 mini. In China, delivery dates for all iPhone 13 Pro and Pro Max configurations average 18 days, which is significantly better than the 39 days last month.
What is not evident in these numbers is whether this is good news or bad news for sales. Perhaps the supply chain challenges have started to ease, allowing iPhones to ship faster. This seems to be the argument made by UBS analyst David Vogt, who has a buy rating on Apple stock.
The other side of the argument is that demand could weaken, which explains the drop in lead times. There’s an even worse take, proposed by Rod Hall of Goldman Sachs: The drop in demand could have been even worse, if it wasn’t for promotional activity in the United States (likely offered by service providers). .
(Learn more about Apple Maven: Wall Street expert says Apple stock will hit $ 3.2 trillion)
Apple: a safe haven
The other hot topic of the week was the macroeconomic impact of the COVID-19 variant Omicron. This is what largely explains the S&P 500 (TO SPY) – Get the SPDR S&P 500 ETF Confidence Report after plunging 1.3% for the week, after plunging another 2.3% during the shortened Thanksgiving week.
The BofA analyst understood why Apple’s stock price found room to climb amid the general market weakness. Based on conversations with investors, Apple is viewed as a haven for its “relatively stable demand and still strong cash flow and return on capital.”
The bullish argument for seeking refuge in AAPL is even more compelling when you consider the stock’s performance in 2021. Apple stocks have been trailing the S&P 500 for most of the year (see chart below). below). When so many tech stocks have managed to rally ahead of the benchmark in recent months, think of Tesla (TSLA) – Get the Tesla Inc report, for example, investors may have been tempted to ‘park’ money in the AAPL this time around.
In our opinion, Wall Street recognizes the improved iPhone turnaround time in the first fiscal quarter. However, analysts don’t seem to agree on whether this means weaker demand or a better functioning supply chain.
Without access to more detailed information, I take the signs as positive. Keep in mind that Apple CEO Tim Cook warned in the latest earnings call of $ 6 billion in lost sales due to supply chain issues. If the timelines are decreasing, it must mean that the revenue pipeline is at least clearing up.
Finally, on macroeconomic factors, Apple once again served as a hiding place for quality-seeking investors – something similar happened during the bear pandemic of early 2020. But I’m afraid the pressures on profit taking won’t lead AAPL to underperform the S&P 500 in the immediate term.
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(Disclaimers: This is not investment advice. The author may go along with one or more actions mentioned in this report. Additionally, the article may contain affiliate links. These partnerships do not influence editorial content. Please support The Apple Maven)