Apple Stock Is on Fire: Can It Sustain the Growth Momentum?

Apple (NASDAQ:AAPL) stock seems to have regained its strength after being impacted by the coronavirus pandemic. The stock has gained around 8.1% since the beginning of May. The stock gain about 15.5% in April, while it declined 7% and 11.5% in March and February, respectively. Apple stock declined by 0.68% on Tuesday and closed the trading day at $316.73, which is near its 52-week high level of $327.85. At Tuesday’s closing price, the company’s market value was around $1.37 trillion.

Notably, Apple warned its investors in February. In a statement, the company discussed how COVID-19 would have a negative impact on its sales. Despite the deadly coronavirus, Apple reported upbeat earnings in the March-ending quarter and boosted its share repurchase program.

Can Apple stock continue to gain in the near term?

Apple has seen a rebound in its iPhone sales in China, which is a vital market for the company. According to a report from CNBC, Apple’s iPhone shipments reached 3.9 million in China in April—around 160% higher than the March numbers. The sales of the low-cost iPhone SE models also surged in China last month, according to CNBC.

Earlier this month, the company re-opened some of its stores in Alaska, Idaho, and Alabama. The stores had been closed amid the coronavirus. The company plans to reopen about 100 US stores, according to Reuters. Most of the stores will allow curbside pickup, while some of the stores will have walk-in service, which is encouraging. Apple stock should regain strength in the near term as the economy reopens and countries gradually lift the lockdowns and restrictions.

For the June-ending third quarter, analysts expect Apple’s sales to decline by 4.63% YoY to $51.3 billion. Meanwhile, Wall Street analysts expect the company’s fiscal 2020 and fiscal 2021 sales to grow by about 1.09% YoY and 12.41% YoY, respectively. In comparison, Apple’s sales declined by 2.04% YoY in fiscal 2019. Analysts’ forecast of a sales growth for the coming fiscal years signals that the coronavirus impact won’t linger for long.

Wall Street analysts expect the company’s adjusted earnings to decline by around 8.98% YoY for the third quarter. Analysts expect the fiscal 2020 EPS to grow by 3.85% YoY. Meanwhile, analysts expect earnings growth of 19.78% YoY in fiscal 2021. In fiscal 2019, the earnings fell by 0.17% YoY.

Analysts’ recommendations and target price

Among the 39 analysts covering Apple stock, 29 recommend a “buy,” seven recommend a “hold,” and three recommend a “sell.” As of Tuesday, analysts have given the stock a 12-month average target price of $312.28, which is at a 2.56% discount to Tuesday’s closing price.

Apple’s 14-day RSI (relative strength index) score is 63.58. The RSI suggests that the stock isn’t “oversold” or “overbought.” Apple stock closed near its upper Bollinger Band level of $328.22, which suggests that it’s at an overbought level.