Bank of America has designated Apple Inc. (NASDAQ:AAPL) as a top pick for 2024, citing optimism surrounding the tech giant’s imminent earnings release and its promising long-term outlook.
Analyst Wamsi Mohan, who maintains a buy rating and a $225 price target on the stock, highlighted Apple’s “rich catalyst path with defensive cash flows” as a key factor driving the recommendation.
Apple is set to unveil its second-quarter results next week, with BofA expressing confidence in the company’s services revenue growth and strong margins. However, the bank cautioned that a weak demand environment could lead to a lower guidance for the quarter, potentially influencing a pullback in shares.
Despite a recent decline in Apple’s stock price, with a 6.5% drop over five days and a 14% decline year-to-date, BofA remains upbeat about the company’s prospects. Concerns over growth, particularly in the Chinese market, regulatory pressures, and a perceived lack of strategy regarding artificial intelligence have contributed to the stock’s underperformance.
Morgan Stanley reduced its price target on Apple to $210 from $220, anticipating a disappointing forecast in the upcoming earnings report. However, the firm suggests buying on post-earnings weakness, considering an upcoming Apple event focused on AI.
Bloomberg Intelligence also strikes a cautious tone, suggesting that weaker iPhone demand in China may prompt Apple to provide sales guidance below consensus estimates for the fiscal third quarter. Analyst Anurag Rana believes this could prolong the company’s slow growth trajectory and negative sentiment.
While Apple remains a significant component of benchmark equity indexes, accounting for 5.7% of the S&P 500, Wall Street sentiment is mixed. Only 55% of analysts tracked by Bloomberg recommend buying the stock, contrasting with other tech giants like Microsoft Corp., Nvidia Corp., Alphabet Inc., Amazon.com Inc., and Meta Platforms Inc., where the percentage of bulls is higher.
Despite skepticism, some strategists find Apple attractive following its year-to-date decline. Cantor Fitzgerald highlighted the stock’s more reasonable valuation and suggested that in an environment of rising inflation and yields, Apple could benefit from a rotation of capital towards less rate-sensitive stocks.
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