Apple Stock To Climb 40% or Sink 10%? What Wall Street Thinks
Apple stock (AAPL) - Get Free Report has been an outperformer compared to other US stocks – whether in the past few weeks or in the last many years. Looking forward, however, not every Wall Street expert agrees on how shares of the Cupertino company will fare.
Today, I turn to the most bullish and the most bearish of analysts. How do their analysis and opinions of AAPL stock vary? And who does the reader think has the best chance of being right: the ultra-optimist who sees Apple climbing 40%, or the pessimist warning of a 10% downside?
Figure 1: Apple Stock To Climb 40% or Sink 10%? What Wall Street Thinks
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Read more: How Warren Buffett Got Apple Stock Wrong
AAPL: Still a Wall Street Favorite
On average, analysts still see AAPL climbing 21% over the next year to a price target of nearly $180 apiece, according to TipRanks. For reference, this kind of performance would be very much in line with the stock’s annual returns since the 1980s, maybe one percentage point lower.
Among Wall Street experts, five super-bulls have a price target of at least $200 per share, for an upside gain potential of 35% or more. See the table below.
Figure 2: List of analyst forecasts on AAPL.
TipRanks
Tigress Financial’s Ivan Feinseth has historically been among the most optimistic of Apple analysts. Today, he is the king of the bulls, as he sees AAPL climbing a whopping 40% from current levels to $210.
His bull case is centered not around one, but several fundamental reasons that I believe check the boxes for most other bullish sell-side professionals:
- At the highest level: Feinseth believes that Apple will continue to increase ROIC (return on invested capital) on the back of “strong brand equity, driven by [the company’s] innovative ability and powerful cash generation.” He also sees Apple’s cash-rich balance sheet as a positive for “future growth, acquisitions, and higher shareholder returns.”
- Regarding iPhone 14 worries: Bloomberg has recently reported on a pullback in iPhone 14 production in China. The Cupertino company itself has also warned of lower-than-expected iPhone 14 Pro sales in the holiday period. But Feinseth seems much less worried. At the core, he sees strong demand for the pricier Pro models, suggesting that supply hiccups are less of a concern. Also, he believes that the demographic group most interested in the Pro is also more likely to consume more services, which is a double dose of bullishness.
- What’s around the corner? Regarding near-term opportunities, Feinseth sees potential in (1) driver assistance systems and (2) virtual reality devices. On the former, the Tigress analyst believes that the CarPlay Interface is Apple’s first move into the large (and possibly very profitable) automotive market.
Not Everyone Is an AAPL Fan
If the most bullish of Apple analysts see the stock skyrocketing next, the most bearish of them believes in another 10% move lower from here. The table below shows that three Wall Street experts think that Apple stock will be trading below its current price 12 months from now.
Figure 3: List of analyst forecasts on AAPL.
TipRanks
The sell-side pro that stands out is Thiago Kapulskis, from ItauBBA. He is the only analyst listed on TipRanks with a “sell” rating on Apple.
I have written about Kapulskis’ views on this channel before. In summary, he does not favor an investment in Apple stock for the following reasons:
- It’s about the economy: Apple could be more exposed than other companies to the challenges faced by the global economies. Among them are (1) the end of monetary easing and (2) a potential recession on the horizon, something that does not usually bode well for the consumer discretionary space.
- No longer an innovator: I believe that Apple has done a good job at bringing tech innovation to the table – from a hugely popular 5G smartphone to a radically redesigned Mac lineup. But Kapulskis disagrees, suggesting that Apple’s “innovation has been more incremental than disruptive since Steve Job’s death.”
- Too expensive: perhaps the easiest bear argument to support is that of stretched valuations. The chart below, provided by Stock Rover, shows that AAPL is far from being a bargain. The ItauBBA team thinks that Apple stock should not command a forward P/E as rich as Microsoft’s (MSFT) - Get Free Report, which it currently does.
Figure 4: Apple's P/E ratio history.
Ask Twitter
On average, Wall Street analysts see Apple stock climbing 21% from current levels – but the range of predictions varies widely. Which of the following do you think is most likely to happen to AAPL in the next 12 months?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
