Nomura Instinet analyst Jeffrey Kvaal maintained a “neutral” rating on the stock. However, he raised the target price due to strong demand for the iPhone 11. Although the target price was higher, it’s still below the company’s current trading price of $227.68.
Overall, the shares gained 0.3% in early market trading today.
Several analysts are bullish on Apple
Kvaal is just one of several analysts who are bullish on Apple. J.P. Morgan (JPM) increased its target price for Apple stock from $243 to $265 last week due to solid demand for the latest iPhones. On October 4, Nikkei Asian Review reported that Apple increased its iPhone 11 production 10% to 8 million units.
The iPhone is a key revenue driver for Apple. Notably, the iPhone accounts for most of the company’s sales. The company has a chance to have two consecutive years with solid iPhone sales. Meanwhile, Apple will likely release a 5G enabled smartphone next year.
The iPhone 11 lineup was announced in September. The company didn’t raise its iPhone prices. The iPhone 11 is priced at $699, which is lower than the launch price of $749 for the iPhone XR in 2018.
The prices will help Apple increase demand in emerging markets like China and India. China is a huge market for Apple. Notably, China accounted for 19.5% of Apple’s sales in fiscal 2019. According to Wedbush analyst Daniel Eves, around 60 million–70 million China (FXI) iPhone users are slated for a device upgrade.
The lower price will also help the iPhone increase its market share in the smartphone segment. Apple has lost market share in the smartphone space. Shipments have fallen for two consecutive quarters. A strong finish in 2019 will be critical for Apple investors. The company generates maximum sales in the last quarter of the calendar year.
Apple stock has risen 44% in 2019
Apple shares have increased 44% year-to-date. The company is the top performer in the Dow Jones Industrial Average Index. The index has risen 13.6% in 2019. Although Apple has gained significant momentum this year, it’s still trading below its record high of $233 due to a slowing global economy and the ongoing trade war. The stellar run meant that the company regained its trillion-dollar market cap. Now, the stock is valued at $1.03 trillion.
Among the 38 analysts tracking Apple, 32 recommend a “buy” and six recommend a “hold.” There weren’t any “sell” recommendations. The analysts have a 12-month average target price of $228.1, which is just above Apple’s current trading price.
Is the stock overbought?
Let’s look at Apple’s technical indicators. The stock is trading:
- 1% above its 20-moving average of $221.14
- 3% above its 50-day moving average of $212.38
- 12% above its 100-day moving average of $203.61
For the last 14 days, the company reported an RSI (relative strength index) of 63, which indicates that the stock is trading close to overbought territory. The RSI measures the speed of and changes in a stock’s price. A score above 70 suggests that the stock is overbought.
Apple has created solid wealth over the years. The company wants to diversify its revenue base and enter business segments like online streaming and subscription gaming. The company will benefit as its ecosystem continues to expand.
The market is showing several signs of a downturn. Will Apple win or will investors lose significant value when the next recession hits the economy?