With Apple stock trading 18% lower in 2022 alone, Wall Street has weighed in on the pullback. Here is what some analysts had to say about AAPL recently.
Apple stock has been trading 18% lower since 2022 started, and the S&P 500 is also flirting with bear territory. The marketwide decline has been generally driven by unfavorable macroeconomic forces and supply chain disruptions.
However, from a business perspective,Apple appears to be performing well, benefiting from solid demand for its products and services.
The current tone on Wall Street towards Apple is bullish — a “strong buy” rating and 27% upside potential, on average. Below is what some of the top analysts think about Apple's current correction, and where they see the key risks and opportunities.
Not A Dot-Com Bubble 2.0
According to Wedbush tech analyst Dan Ives, the correction seen in tech stocks is not a second version of the dot-com bubble. However, 2022 could separate the sector into two halves: "clear haves and have nots."
The analyst said that the strongest tech companies will likely emerge from the current bearish scenario even stronger than before. Some of those candidates include big tech names like Apple, the top pick in Wedbush's playbook, followed by Microsoft, considered by the analyst one of "the safest landing spots for investors" at the moment.
Ives also said that cyber security, cloud, A.I. (artificial intelligence), and big data will continue to benefit from strong spending, despite the choppy markets and softer macro backdrop.
In an interview with Bloomberg, Dan Ives said that now is the time to look at the fundamentals and pick winners.
Concerns Over Regulatory And Macro Risks
Not so bullish is HSBC analyst Nicolas Cote-Colisson, who has a neutral position on Apple at the moment due to the company's stance on the macro and regulatory environment.
One reason for skepticism is the European agreement on the Digital Markets Act (DMA). The new European regulation could mean that Apple needs to allow users to install apps from outside the App Store. The analyst sees this headwind as possibly affecting the company's business model. The new regulation is not expected to be enforced until 2023.
In addition, Cote-Colisson sees high risks of a recession hurting consumer spending and, of course, demand for Apple devices.
Tough Economy, But No Need To Panic
Morgan Stanley analyst Katy Huberty trimmed her price target on Apple a few weeks ago. Causing her to de-risk her expectations are challenges in the June quarter, which include foreign exchange, the Russian sales ban, and the lockdowns in China due to COVID-19.
More recently, the analyst said that she was encouraged by the AppStore's performance during April, based on data provided by Sensor Tower. Huberty estimates accelerated revenue growth of 8% YoY in April over the March quarter, which grew 6% YoY. That said, the analyst has kept her forecast unchanged at 15% YoY growth for the June quarter.
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