This Analyst Has Patience When it Comes to Apple (AAPL) Stock; Here’s Why
Wedbush analyst Daniel Ives takes a metaphoric sigh after learning some negative news coming out of China’s People’s Court, which granted two preliminary injunctions against Apple (AAPL) — prohibiting the company from selling two older models of iPhones in China.
This isolated ruling comes from a series of cases brought against Apple by Qualcomm (QCOM) regarding specific patents which enable users to adjust and reformat photos and manage applications using the touchscreen. Currently, iPhones are sold with an iOS 12 operating system and APPL management has expressed it does not want to interfere with the systems. Ives says he believes these particular models only account for between 10 and 15% of potential sales for the region.
Apple released a statement suggesting there should be no disruption to the models Chinese consumers can purchase, though the analyst points out that is not exactly the message being sent out from Chinese reports. That being said, Ives says the noise doesn’t impact his long-term stance on AAPL stock. The analyst maintains an Outperform rating for the stock with a price target of $275. (To watch Ives’ track record, click here)
Ives reiterates that this news is just exacerbating the stress level of investors — being that the latest iPhone model – XR did not sell well. “It continues to feel like every day the sun will come out and there will be another bad data point for Apple as since the company reported its quarter in early November, it’s been a string of bad news around iPhone demand, transparency in the food chain, supplier cuts, China tariff worries with the stock down significantly and losing its gains for the year. We continue to believe today’s news is more noise than a fundamental impact, although it will add to the black clouds over Cupertino until investors hear from the company in January. We also believe given all the news swirling around Apple and iPhone demand that the stock will have pressure although we remain bullish on the name with $15 of earnings power in FY20 that remains rock solid in our opinion and a stock trading towards trough historical lows. It all comes down to the installed base and 350 million iPhones in the window of an upgrade opportunity over the next 12 to 18 months with 60 to 70 million of those out of China as a key region, which is why investors feel like this morning is another gut punch,” Ives said.
Not all analysts can get past the recent spats with Apple. TipRanks analytics shows out of 34 analysts who are watching the tech-giant stocks, 19 are bullish, 14 are sidelined and 1 is bearish. The consensus price target of $228.31 shows about 35% potential upside from the current stock price. (See AAPL’s price targets and analyst ratings on TipRanks)