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Los Angeles’ Apple Tower Theatre retail store.
Getty Images/AFP/Patrick T. Fallon
Apple
So far this year, shares have trailed the market, rising only 6% year to date through Friday, compared to a 17 percent rise in the S&P 500.
S&P 500 index.
However, the stock is rising on Tuesday as the focus shifts to the iPhone 13’s fall release. In recent trading, Apple was up 1.4 percent to $141.98. The S&P 500 is currently down 0.5 percent.
Samik Chatterjee of J.P. Morgan restated his Overweight rating on Apple (ticker: AAPL) and raised his target price to $170 from $165. In a research note, he claims that the stock’s year-to-date underperformance is due to a lack of catalysts. However, he points out that demand for the iPhone 12 has remained “relatively resilient”—and that Apple shares normally outperform in the July-September period leading up to the annual autumn phone launch. “We feel the setup is appealing, and Apple shares are positioned for a big outperformance over the next 2-3 months given the first half underperformance,” he writes, adding that there is also near-term upside from recent market share increases for the iPhone 12, particularly in China.
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According to the analyst, present low investor expectations for the iPhone 13 pave the way for robust stock performance following the launch of the new phones. He believes that demand will outpace present projections. Chatterjee sees echoes of the iPhone 11 launch, when expectations were low and investors were looking forward to the iPhone 12, the company’s first 5G-capable phones, a year down the road. However, the iPhone 11 sold better than most analysts predicted. Meanwhile, according to Loop Capital analyst Ananda Baruah, who checked with the supply chain, Apple has increased its iPhone production expectations for calendar 2021 to the 220 million to 225 million range, up from the recent 205 million. (Apple never says anything about its production plans or unannounced items like the next iPhone.) He keeps his Buy recommendation on Apple stock, but lowers his target price to $150 from $160. Separately, Evercore ISI analyst Amit Daryanani writes that Apple’s App Store developer revenue increased by 23 percent in June, up from 13 percent in May and 18 percent in April. Overall, the quarter’s increase was 18 percent, down from 32 percent in the March quarter. Nonetheless, he believes that overall Street expectations for Apple’s June quarter services revenue growth are too high—the average is for 23 percent growth, down from 27 percent in the March quarter. He expects a 19 percent increase. Daryanani maintains his Outperform rating and $175 price target on Apple shares as a long-term bull. Eric J. Savitz can be reached at eric.savitz@barrons.com./n
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