Apple Inc. (Ticker Symbol: AAPLWealth Strength IndexAAPL is Extremely Up and trending Up) was on the receiving end of a price target increase from JP Morgan who expects Apple’s stock to rise more than 20%. The American multinational investment bank and financial services company raised Apple’s price target to $265 up from their previous target of $243. The firm cited that it expects investor sentiment to improve along with forecasting for more iPhone sales in the second half of the year.
Last quarter Apple reported an earnings per share beat of $2.18 vs. Wall Street analysts’ expectations of $2.10. Additionally, the company reported a revenue beat of $53.8 billion vs. Wall Street analysts’ expectations of $53.39 billion. Reported iPhone revenue for the quarter came in slightly less than analysts were expecting at $25.99 billion vs. $26.31 billion estimated by the street. The company did update its fourth-quarter revenue guidance and expects revenue to fall between $61 to $64 billion vs. Wall Street analysts’ expectations of $60.98 billion.
The image above is just over a two-and-a-half year-long chart of Apple’s stock. The stock started out in 2017 trading positively and slowly trending higher led by a series of solid earnings and guidance reports. The stock found price support multiple times at its 100- and 200-day moving averages throughout the next six quarters. Apple continued to rally and the stock reached an all-time high of $233.47 on October 3rd, 2018. At that time, Apple was the largest company in the world valued at over $1 trillion dollars. Apple put in a top shortly after that while forming a bearish divergence pattern, where the stock makes a higher high in price but the Relative Strength Index makes a lower high (as indicated by the yellow lines on the chart). Traders and investors sometimes look at divergences for a possible pause within the current trend, which can at times lead to a reversal, as occurred in Apple’s case.
Apple then retreated back to reasonable valuations by pulling back nearly 40% to just under $150.00. Apple shares took off to a great start in 2019, rallied off of its 2018 lows and proceeded to move higher. In early March of 2019, Apple broke above its downtrend from 2018 and found some price support at its 100-day moving average right around the $175.00 price level and continued to rally more than 11%. Currently, the stock is trading positive for the year and if JP Morgan’s price target gets achieved, it would put Apple back at all-time highs and would give the company another trillion-dollar valuation.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 34 analysts offering 12-month price targets, the average price target for Apple’s stock is $224.20. According to that number, the stock is priced at a slight discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $222.39.
Apple’s iPhone revenue was slightly lower this quarter than the same period last year. Some of the weakness was offset by the strength of its wearables divisions which includes Apple Watch, AirPods and Beats headphones. IPhones usually generate more than 50% of Apple’s revenue and this was the first time since 2012 that it has not.
Investors in Apple should look to their next earnings release on November 3rd for fresh news within the company.