Why Apple’s Stock Holds Promise Despite a 10% Dip

TipsForTraders | April 10, 2024

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Despite a tumultuous start to the year, resulting in a notable 10% decline and erasing over $200 billion of its market value, Apple remains a focal point of optimism for investors, as highlighted by Wedbush analysts. The tech giant’s shares have been adversely affected by regulatory challenges in China, heightened competition from domestic manufacturers like Huawei, and a broader crackdown on iPhone usage within the country. This combination of factors has led to a particularly challenging demand environment in China, arguably the toughest Apple has faced in the past half-decade, causing a moderate shortfall in iPhone sales expectations for March.

Nonetheless, Wedbush maintains a confident outlook on Apple’s stock, sustaining an “outperform” rating with an ambitious $250 price target. This forecast suggests a potential 48% upside, underpinned by several key drivers. Firstly, despite short-term setbacks, the overall demand for iPhones in 2024 is expected to meet projections, buoyed by a significant pool of users poised for upgrades. With approximately 270 million iPhones potentially being replaced by newer models, especially with the anticipated launch of the iPhone 16, there’s a clear path for robust sales.

Additionally, Apple’s services sector continues to demonstrate resilience, achieving record revenue in the first quarter of the year. The company’s strategic focus on integrating artificial intelligence into its products further underscores its commitment to innovation, with significant announcements expected at the upcoming Worldwide Developers Conference in June.

At the core of Apple’s enduring appeal is its unmatched global footprint, boasting an installed base of 2.2 billion devices. This extensive reach positions Apple as a dominant player in the smartphone industry and lays the groundwork for future growth, especially as the company navigates the complexities of the Chinese market and broader global challenges.

Looking ahead, the financial community is keenly awaiting Apple’s next earnings report, slated for release on May 2. This will provide valuable insights into the company’s performance and its trajectory amidst ongoing challenges. According to Wedbush, the forthcoming quarters may continue to reflect growth headwinds. However, a resurgence is anticipated as we move towards the latter part of the year and into 2025. The analysts posit that, despite the need for patience in the short term, the strategic initiatives underway are sowing the seeds for a robust growth revival.

This sentiment is echoed across Wall Street, with a predominant “strong-buy” consensus among analysts. The average target price stands at $202 per share, indicating a 20% growth potential. This collective optimism suggests that, despite current hurdles, Apple’s innovative edge, vast user base, and strategic direction hold the promise of reclaiming and even surpassing its previous market stature.