Apple Stock: Concerns About A Recession Are Put To Rest By Apple. The Following Are The Reasons Why Analysts Believe It Can Continue To Win

Apple Stock

Apple Stock (NASDAQ:AAPL)

You want to protect your portfolio from a downturn in the U.S. market, and you’re looking for a consumer-friendly technology stock that has a strong presence internationally. It’s possible that Apple (NASDAQ:AAPL) is the right fit. 

With a market capitalization that is greater than $2 trillion, Apple is consistently ranked as one of the most valuable companies in the world. The tech giant continues to innovate new products and services while also consistently outperforming its competitors in the markets for smartphones, tablets, and smartwatches. Analysts believe that Apple is well-positioned to continue its winning streak in spite of the ongoing economic uncertainty caused by the COVID-19 pandemic. In this piece, we will investigate the factors that have contributed to Apple’s success to date, as well as why it is anticipated that Apple will continue to thrive in the years to come.

The financials of Apple are one of the primary reasons why analysts believe that the company is in a good position to weather economic downturns and continue to be successful. Apple’s revenue for the first quarter of 2021 was a record-breaking $111.4 billion, representing a 21% increase from the same period the previous year. The company reported a net income of $28.8 billion, representing a 29% increase from the previous year’s results. Apple’s robust financial performance can be attributed, in part, to the company’s extensive product lineup, which includes not only consumer electronics but also wearables and computers (like the Apple Watch). Significant amounts of recurring revenue are also generated by Apple’s extensive ecosystem of services, which includes the App Store, Apple Music, and iCloud, amongst others.

A Varied and Compelling Product Offering

Apple’s wide range of offerings is one of the company’s most significant advantages. Apple’s iPhone, iPad, and Mac computers are the best-selling products in their respective categories, and the company is constantly coming out with innovative new products such as the Apple Watch and AirPods. Apple is able to appeal to a diverse group of customers because the company provides a variety of products that can be purchased at a variety of price points. This diversification helps to reduce the risk that could be posed by the failure of a single product or an entire market.

A Strong Web of Supporting Services Ecosystem

Another important factor that contributes significantly to Apple’s financial success is the ecosystem of services that the company offers. Significant amounts of recurring revenue are generated for the company by the sale of apps and services such as Apple Music, iCloud, and the App Store. In addition, the services that Apple provides help to lock customers into the Apple ecosystem, which makes it more difficult for customers to switch to a platform that is offered by a competitor.

Innovative Product Distribution Network

Analysts believe that Apple is well-positioned to continue its winning streak for a number of different reasons, one of which is the innovative product pipeline that the company has. Apple has a well-established track record of shaking up established markets with ground-breaking products such as the iPod, iPhone, and iPad. Apple has maintained its tradition of technological leadership in recent years by releasing ground-breaking products such as the Apple Watch, AirPods, and HomePod. In addition, there are rumors that Apple is working on new products such as augmented reality glasses and an autonomous vehicle.

AR Glasses

One of the products in the technology sector that is receiving the most anticipation is Apple’s rumored augmented reality glasses. Users will be able to access information and digital content without having to use their hands to do so with these glasses, which are anticipated to be fashionable, comfortable, and lightweight. There are also rumors that the glasses will have advanced augmented reality capabilities. These capabilities might have uses in areas such as gaming, education, and workplace productivity.

Car That Drives Itself

Another product that has generated a lot of buzz in the technology industry is the rumored self-driving car that Apple is working on. It is anticipated that the vehicle will come equipped with innovative interior and exterior design, as well as cutting-edge autonomous driving capabilities. Analysts believe that Apple could be in a good position to capture a significant share of the market for autonomous vehicles, which is projected to be worth trillions of dollars in the coming years.

Customers in China and India are still looking to upgrade their phones, in contrast to consumers in the United States, who may be more wary about purchasing iPhones due to growing concerns about the economy. According to analysts, this makes Apple (NASDAQ:AAPL) a likely winner even in the midst of a macroeconomic environment that is getting worse.

iPhone sales were the driving force behind Apple’s earnings beat in the second quarter. Despite lower-than-expected sales in the United States, analysts at KeyBanc Capital Markets highlighted accelerating growth in China and across global emerging markets as a key reason to be optimistic about the future. This growth is expected to continue. 

“With records being set on the installed base of active devices across all geographies and all product categories, we believe investors are likely to continue to look past the noise of quarterly results as Apple is likely more resilient to macro than it has ever been,” analysts at KeyBanc led by Brandon Nispel wrote in a report. “We believe investors are likely to continue to look past the noise of quarterly results as Apple is likely more resilient to macro than it has ever been.” 

The price target that KeyBanc has set for Apple shares increased to $180 from $177, and the firm maintained its Overweight rating.

Analysts have high hopes that Apple will enjoy the same level of success in India as it does in China, which is currently Apple’s most successful market. Apple is planning to make a greater push into the Indian market, which is currently dominated by Chinese brands. The company opened its first Indian stores earlier this year. 

“We continue to expect [Apple] to mirror its strategy for China for India (from both a supply chain and consumer sales standpoint), only we believe it will take a long time for it to generate 5%-10% of its sales from the country,” an analyst from D.A. Davidson named Tom Forte wrote in a research note. 

D.A. Davidson has increased its target price on Apple to $193, up from $173, and has maintained a Buy rating on the stock. The firm cites increased near-term profitability forecasts as the reason for the price increase. 

On Friday, Apple share prices rose 2.4% before the market opened, reaching $169.70 per share. The price of the stock has increased by 28% so far this year

According to FactSet, Apple is currently trading at a multiple that is approximately 26 times its forecast earnings for the next 12 months. This multiple is higher than the approximately 22 times that it has averaged over the past five years. This is in spite of the widespread belief on Wall Street that the company’s sales for the current fiscal year will most likely show a slight decrease. Despite this, analysts continue to support it as a means of overcoming concerns regarding a cyclical decline in consumer spending. 

Evercore ISI analysts have reaffirmed their recommendation that investors Overweight the stock of Apple. They stated that the company’s results demonstrated “the ‘consumer staple’ nature of iPhones vs. investor perception of iPhones as a discretionary technology product” while maintaining a target price of $190 for the stock.

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