Case Study: Apple (APPL) stock according to high performing analysts
Key Points
Performance
AAPL shares fell by 1.3% this week, pushing their year-to-date gains down to 44.69%. This compares favorably to the S&P 500 which is up by 12.41% on a year-to-date basis.
Event & Impact
Apple’s Worldwide Developers Conference (WWDC) occurred this week, causing Apple shares to rally to all-time highs of $184.95 on Monday.
Noteworthy News:
Apple highlighted its first major product launch in years, with its augmented reality/virtual reality headset, the Vision Pro. This piece of hardware is slated to cost roughly $3,500 and, according to analysts, offers consumers access to cutting edge AR/VR capabilities. Analysts also believe that the AR/VR market is likely to grow at a rapid pace throughout the remainder of this decade, inspiring the bullish sentiment surrounding AAPL shares.
Nobias Insights
49% of recent articles published by credible authors on AAPL shares offer a “neutral” bias after its nearly 45% year-to-date rally. Four out of the five credible Wall Street analysts covering Apple are “bullish”; however, the average price target being applied to AAPL by these credible analysts is $173.60, which implies downside potential of 4.1% relative to the stock’s share price of $180.96.
Bullish Take Nobias 4-star rated author, Dani Cook, said, “The VR market is expected to hit a value of $227 billion by 2029, expanding at a compound annual growth rate of 45%, according to Fortune Business Insights.”
Bearish Take The Value Portfolio, a Nobias 5-star rated author, stated, “For the upcoming quarter, the company expects a continued negative impact from forex along with massive weakness in the Mac and iPad division.”
AAPL Jun 2023
Apple (AAPL) shares hit new all-time highs this week after bullish commentary that came out of its WWDC 2023 event. The WWDC event is Apple’s Worldwide Developers Conference where the company typically highlights new hardware and/or software products or capabilities that it’s focused on launching each year.
The 2023 event was centered around Apple’s first major product launch in years. The company pulled back the curtains and shed light on its augmented/virtual reality headset, entering into the fierce competition for market share in this fast growing industry. Apple’s hardware, called the Vision Pro headset, is priced at roughly $3,500 and excited investors because of its long-term sales volume potential.
AAPL hit all-time highs of $184.95 on Monday before trending lower throughout the remainder of the week. During the last 5 days, AAPL shares are down by 1.30%; however, on a year-to-date basis, Apple is beating the broader market by a wide margin, up by 44.69%.
Bullish Nobias Credible Opinions:
This week, Nobias 4-star rated author, Dani Cook, highlighted Apple as a top buy in her article titled, “2 Virtual Reality Stocks to Invest in”. Looking at Apple’s AR/VR hardware specs, Cook wrote, “The Vision Pro has taken a massive step forward in VR, with features never before seen in competing headsets. “The device is a full-fledged computer in a headset casing, granting it all the productivity and entertainment capabilities of a MacBook,” she continued.
“Meanwhile,” Cook said , “it has removed the need for controllers required in headsets from Sony and Meta by utilizing eye tracking and hand gestures.” Overall, she’s bullish on this area of the market, stating, “The VR market is expected to hit a value of $227 billion by 2029, expanding at a compound annual growth rate of 45%, according to Fortune Business Insights.”
And therefore, she believes that Apple’s entrance into the space bodes well for its shares in the long-term. “Apple's dominance in consumer tech and brand loyalty strengthen its outlook in VR and make its stock an attractive buy as the industry blossoms,” she concludes.
Luke Lango, Nobias 4-star rated author, also published a report this week that put a spotlight on his bullish growth outlook for the AR/VR space. Writing about Apple’s Vision Pro launch, he said, “In fact, Apple isn’t even calling it a VR headset. It’s calling it a “spatial computer” to differentiate the product from the rest of the VR world.”
“You can enjoy both AR and VR experiences. You can control everything with your hands and gestures. And the headset boasts a better-than-4K screen resolution for each eye,” he said. Lango was quick to note, “None of that was possible before the Vision Pro.” He doesn’t believe that this will be a mass market product right away.
“At $3,499, the Vision Pro won’t become ubiquitous,” Lango wrote. “But,” he said, “it will generate significant interest in and engagement with extended reality content.” “And as wealthy folks shell out for this new tech, the average consumer will be watching from the sidelines. And that will drum up pent-up demand for a headset,” he explains. Over the next few years, Lango believes that, “The number of people using VR every day will grow by hundreds of percent, and the amount of content in VR environments will grow just as much.”
Bearish Nobias Credible Opinions:
The Value Portfolio, a Nobias 5-star rated author, recently published a bearish article in response to Apple’s recent product announcement and the stock’s ongoing rally. “Apple is a great company,” he said. “But it's a great company at too high a price.”
Regarding Apple’s new hardware launch, The Value Portfolio wrote: “Apple Inc. has announced its Vision Pro, the company's first new product category since the Apple Watch. The category has done incredibly well as a new wearables category for the company. However, we'd argue that was due to the health benefits. As we'll see throughout this article, we don't expect the Vision Pro to outperform, but even if it does, it won't justify Apple's valuation.”
Looking at the company’s fundamental results and forward guidance, The Value Portfolio noted, “For the 6-month period [trailing], the company's net sales dropped almost 5%.”During this same period of time, they said, “the company's net income has dropped roughly 4%.”
“That continued weakness at a 30+ P/E is a tough position for the company to be inside,” The Value Portfolio adds. Furthermore, looking at expectations for the coming quarters, The Value Portfolio stated, “There are warnings for a continued decline in revenue.”
Also, The Value Portfolio added, “for the upcoming quarter, the company expects a continued negative impact from forex along with massive weakness in the Mac and iPad division.”“The company thinks that the weakness won't necessarily continue,” The Value Portfolio said, “but at its valuation, it needs more than stagnation, it needs growth.” “As a result, we recommend against investing in the company at the present time,” the author concluded.
Although The Value Portfolio might not like Apple’s prospects in the near-term, AJ Fabino, a Nobias 4-star rated author, published an article at Benzinga this week stating the former Apple co-founder Steve Jobs’ biographer, Walter Isaacson, believes that Jobs would have “loved” the Vision Pro device.
“He would love it," Isaacson said in a CNBC interview earlier this week,” Fabino wrote. "I think he always wanted to go into new fields ever since he decided to make the iPod in the early 2000s, which was an unusual thing for, you know, a computer company to do, and likewise with the iPhone,” Isaacson continued.
Fabino noted that Jobs had an interest in the “advancement of human-computer interfaces” and used Siri as an example of Jobs’ affinity for this space. Isaacson agrees. “When he [Jobs] saw Siri, that was a great leap in human-computer interface, and this is one of the next big leaps in that,” he said.
Sell-side Analysts Opinions
Only one of the five credible Wall Street analysts who cover AAPL shares provided an update on their opinion on Apple stock after the company’s recent product launch. Nobias 5-star rated analyst, Toni Sacconaghi’s response to Apple’s Worldwide Developers Conference was neutral. In a note to clients this week, she maintained his $175.00 price target.
According to The Fly on the Wall, “Bernstein analyst Toni Sacconaghi notes that Apple executives delivered their keynote presentation at the company's annual Worldwide Developer Conference, or WWDC, which included the introduction of the company's much anticipated AR/VR device, the Vision Pro.
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
The Vision Pro provided a glimpse into the future, the firm says, pointing out that Apple has a strong track record of creating new markets. Nonetheless, Bernstein continues to struggle with the consumer value proposition beyond traditional VR applications. The firm also highlights that the device is shipping later and is more expensive than anticipated, and will likely be immaterial to Apple's financials for at least a couple of years. Bernstein has a Market Perform rating on the shares with a price target of $175.”
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, the average price target being applied to Apple shares by these 5 credible Wall Street analysts is $173.60. Apple currently trades for $180.96 after rallying to all-time highs this week. Therefore, the average Nobias credible analyst price target implies downside potential of approximately 4.1%. The credible authors that Nobias tracks share this fairly neutral outlook after Apple’s recent rally, with 49% of articles signaling that shares will increase in value.
Disclosure: Nicholas Ward is long AAPL. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.