Is Wall Street Over-Optimistic about Apple’s New Services?




In 2019 so far, Apple stock (AAPL) has outperformed the broader market—partly because of investors’ high expectations for its March 25 event. As of Monday’s closing, AAPL was trading with 19.7% gains against 11.6% and 15.1% year-to-date rises in the S&P 500 Index and NASDAQ Composite Index, respectively.

As of March 25, Apple was the second-largest US company (SPY)(QQQ) by market capitalization, after tech giant Microsoft (MSFT).

Are Wall Street analysts over-optimistic?

After the company’s announcements yesterday, many Wall Street research firms and analysts have revised their price targets for Apple stock upward. According to Thomson Reuters, Morgan Stanley has raised its 12-month price target for Apple stock to $220 from $197 while UBS has upped its target to $215 from $185. Morgan Stanley and UBS’s new price targets for the stock reflected 16.6% and 13.9% upside potential, respectively, from AAPL’s Monday closing of $188.74.

Earlier today, Piper Jaffray raised its price target for Apple to $201 from $187 while BTIG revised its price target to $220 from $189.

While Apple’s new services announcements might impress, it’s important to note that its key new services—such as video streaming services and news subscription services—will have to face stiff competition. A crowded video streaming services market could also make it difficult for Apple to distinguish its services from peers including Netflix, Amazon Prime Video, HBO, and Hulu.

At its current valuation, Apple stock might look expensive, as Market Realist CEO JP Gravitt pointed out. Check out the full article, You Really Want To Be Buying Apple Now?

More From Market Realist