Following results that were above expectations, Apple (NASDAQ:AAPL) was up modestly premarket on Friday. Before the bell, Apple stock was up 1%. Gains were kept in control during the holiday season by caution. Analysts applauded the shares’ tenacity nonetheless. After selloffs from the other mega caps this week, Evercore analyst Amit Daryanani kept his Overweight recommendation on the company, referring to AAPL as the “Last FAANG Standing.”
The levers for EPS upside are GM’s expansion from easing the supply chain, OPEX controls, and buybacks, according to Daryanani in a note. “We think AAPL remains ideally positioned to sustain mid/high single-digit sales and low/mid-teens EPS growth on a multiyear basis,” he said.
Apple Stock Analysis
Samik Chatterjee, a J.P. Morgan analyst who also has an Overweight rating, says that growth in iPhone sales should make up for a small drop in services revenue. With “resilience to a challenging macro through the mix of products and services expected to generate a re-rating,” he expects a higher multiple than the current 23x.
Citi’s Jim Suva keeps his Buy recommendation on AAPL and cites five factors that could drive up the stock price: better services growth, the potential for meaningful expansion in India, a foldable iPhone, the fact that the company is still expanding, and platform expansion.
Recent polls show that Apple is the least popular stock among its peers. This shows how skeptical investors are about the tech businesses of mega-cap merchants, especially Apple, said Suva. Apple says, “We expect consumers will change their spending allocations and continue to spend on Apple’s growing platform of products and services.” Customers may have less money to spend because of inflation and because online stores are selling off their stock.
On a less positive note, Bernstein keeps its Market Perform rating and says that investors should be careful in 2023. Analyst Toni Sacconaghi, Jr. said, “Apple did not give a forecast for December sales, other than to say that growth would be less than 8% in the fourth quarter.” “Our assessment is that AAPL lacks confidence that it can increase revenues in FY Q1 – despite benefiting from an extra week that should contribute an additional 700 bps of revenues – in part due to uncertainty surrounding iPhone 14 and wearables, which it continues to believe is its most economically sensitive business.” Livy Investment Research, a contributor to SA, advises investors to keep a watch on services for AAPL.
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