Even the powerful Apple (Apple stock) hasn’t been able to pull itself out of the stock market’s downward spiral that’s been occurring over the past few months.
In 2018, Apple stock (NASDAQ:AAPL) is down almost 22%, worse than the 19.5% fall seen in the Dow Jones Industrial Average.
The pressure on Apple’s stock is a reflection of investor concern about the global economic slowdown, which reportedly led Apple to cut production on some models from its new iPhone suite. This comes despite the fact that Apple (NASDAQ:AAPL) has an impressive cash position and a sturdy recurring revenue stream via various services.
Wedbush analyst Dan Ives commented on the rumored reductions in iPhone production by saying, “Clearly, this negative news in light of an already shaky macro and the jittery market will send shockwaves across the Street with investors concerned this is another shoe to drop in this dark market with golden child Apple front and center.”
Apple Stock Price Analysis
Despite the growing anxiety, Citi analyst Jim Suva plans to maintain his bullish stance on Apple’s shares leading up to the company’s earnings report on October 27.
In a recent client letter, Suva stated categorically that “We are not fearful about Apple stock notwithstanding Halloween and investor anxieties.”
Here’s more on why Suva’s opinion of Apple stock (NASDAQ:AAPL) is so compelling:
Rating: Buy (reiteration)
The desired price is $185
Assumed Increase in Stock Price: 33 Percentage
Suva is focusing on several major longer-term drivers, one of which is the likely introduction of a foldable iPhone in 2023. This is one of the reasons why Suva is seeing beyond what might be a mixed quarter from Apple.
Mix shift continues to skew away from lower-priced Android phones towards more mid-end and premium pricing products; 3) A $90 billion (4% of current market cap) stock buyback, which lends support to shares; 4) Sticky services revenues and potential for more devices-as-a-service offering driving margins higher, and 5) New product categories” “1) Checks suggest iPhone 14 build is still on track for 2H expectations of 90 million units, and we expect a fold.
But with regard to Apple’s fiscal quarter, which is scheduled to be disclosed on October 27.
“Due to the fact that foreign exchange continues to be a substantial drag on performance, and since we anticipate these to be worse than the 600 basis point guidance provided, our estimates for the September quarter are worse than those provided by the Street. We anticipate that the positive effects of easing supply limitations will somewhat counterbalance the negative effects of currency fluctuations… According to the statistics provided by Sensor Tower, a more worrisome indicator is the year-over-year reduction in sales from the App Store, which dropped by 2%. Further, widespread weakness in advertising is anticipated to weigh in. However, other services (such as iCloud and AppleCare) will likely compensate the reduction. We still anticipate a year-over-year increase in total for the services category. We anticipate that expenditure on Services from an expanding installed base will be the primary emphasis, in conjunction with spending on iCloud, AppleCare, and Apple’s own digital media assets. Even if our projections are lower than the general consensus, we have noticed that the buy-expectations side has been reduced in general.”
It seems that other Wall Street experts are also maintaining their bullish stance on Apple’s shares. In recent weeks, a number of people have expressed their approval of Apple.
According to Amit Daryanani of Evercore ISI: “Demand has not weakened at all, which stands in sharp contrast to previous worries about a slowdown in the economy. Our assessment continues to be that even though the number of units sold will be relatively unchanged or slightly higher, the real story here is that average selling prices will be up high single digits in the second half. This will allow for an upside to not just the September quarter, but likely the December quarter as well.”
Piper Sandler’s Harsh Kumar: “The study found that 87 percent of respondents had owned an iPhone and that 88 percent of respondents intended to buy an iPhone in the near future. Given the saturated nature of the premium smartphone market, we think it’s crucial that penetration has increased along with intention. Furthermore, these developments are optimistic, given that the corporation is always releasing new iPhones, which may provide a considerable product cycle renewal. As the customer base for Apple hardware continues to expand, we believe that these positive trends have the potential to also serve as a driver for future expansion of the company’s service offerings.”
Featured Image: Megapixl © Bedo
Author Faith Yakubu 
