The club woke up to Wall Street duel research notes on Apple (APPL) Thursday morning following a report that the tech giant might cancel plans to ramp up production of its nascent iPhone 14. About Apple’s production capacity and continue to support inventory. What Bank of America Says Bank of America On the other hand, Bank of America downgraded Apple’s stock to neutral from buy, lowering its target price to $160 from $185 on the back of weak consumer demand. In addition to the risks of a weak iPhone 14 cycle, the note pointed to a slowdown in services revenue, an expected decline in gross profit in the coming quarters, a return to pre-Covid demand levels for iPad and partly for Mac, and negative. The effect of the dollar’s strength on international demand. “What we’re seeing is that consumer spending is really starting to slow … Demand is slowing and that’s the main concern,” Bank of America analyst Wamsey Mohan told CNBC on Thursday. Apple stock, which is down more than 19% year-to-date, was down nearly 5% Thursday afternoon. Shares on Wednesday closed just 1.2% lower but were much lower earlier in the session. The stock made a real high at its early January highs in the summer rally that started in mid-June and ended in mid-August. What Rosenblatt says Rosenblatt Securities has upgraded Apple shares to buy from neutral, raising the target price to $189 from $160. Analysts at Rosenblatt cited a bank survey of more than 1,100 adults in the US that showed “high interest” in the company’s new iPhone 14 Pro Max and Ultra. Speaking to the higher demand mix, analysts note that two-thirds of respondents intend to choose the Pro Max (40%) or Pro (26%) models. Perhaps most importantly for the long-term investor interested in Apple’s ability to increase revenue from its services, the Rosenblatt survey revealed that “18% of Android respondents said they have already purchased or expect to purchase an iPhone 14 in the next 12 months.” In terms of watches, 23% of respondents “have already ordered one or expect to do so within the next 12 months”, while 47% said “those who anticipate buying a device are planning on Ultra”. This is a very positive development that could lead to a significant increase in the average selling price of a high-end watch. “These devices are something consumers really want, based on our survey work,” Rosenblatt analyst Barton Crockett told CNBC Thursday, adding that Apple was “the cream of the crop that consumers want to spend money on in this environment.” Club Opinion We believe Bank of America is right to highlight the strong dollar as a real risk to international demand. However, even Bank of America analysts acknowledged that their concerns are more about the near-term valuation than the long-term outlook for the business. “Although Apple’s long-term outlook remains favourable, we see increased risks to earnings and valuation in the near term,” the note said. In fact, that’s why there is no change in our view that no matter how absolute demand for the iPhone 14 in the end, investors would do well to own Apple in the long run, rather than trying to trade the cycle. Long-term value creation has more to do with the overall growth in the installed base than with the number of phones Apple could sell at launch. We believe that the installed base will likely continue to grow as the Apple ecosystem continues to strengthen. Furthermore, management’s “net cash neutral over time” strategy supports earnings growth even if underlying growth stagnates for some time. In this brutal bear market, it’s worth bearing in mind that the fall in Apple’s stock price goes in the short term, the more shares the company can buy back through the buyback authorization program — and as a result, the more patience the investor will have. of the company in the long run. (Jim Cramer’s Charitable Trust Long APPL. See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable fund portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. The above investment club information is subject to our Terms and Conditions and Privacy Policy, along with our disclaimer. No fiduciary obligation or duties will be created by the employees, or created, by virtue of your receipt of any information provided in connection with the Investment Club. There are no specific results or guaranteed profit.
Customers queue at the Apple Fifth Avenue store for the release of the Apple iPhone 14 in New York City, September 16, 2022.
Andrew Kelly | Reuters
The club woke up to Wall Street dueling research notes about Apple (APPL) Thursday morning at After a report is issued The tech giant may cancel its plans to increase its iPhone 14 production. Despite the discrepancies, we are not too concerned about Apple’s production capacity and continue to subsidize stock.
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