After entering correction territory for a moment, Apple stock (AAPL) – Get Apple Inc. Report has caught an updraft. Supporting share price was an outstanding earnings day in which the Cupertino company impressed, especially on iPhone and Mac sales.
Today, the Apple Maven reviews some of the key Wall Street reports that came out after fiscal Q1 results. They help to explain why AAPL has already spiked nearly 10% from the January 27 price of less than $160 per share in a matter of a couple of days.
Figure 1: Apple Stock: Why It Is A Buy After Earnings
Unsplash
Why AAPL remains a buy
Before turning to Wall Street, I start by restating my own conclusions about Apple’s earnings report, shared during the live blog:
“Not much has changed in Cupertino. Apple continues to execute extremely well, despite the supply chain issues. Demand for Apple products and services is at a peak. From a business perspective, investors should expect more of the same in the foreseeable future. The stock probably benefited from being down some 12% from the early January high. At least for now, dip-buyers have been taking advantage of the opportunity.”
Earnings results supported my January 24 opinion that Apple stock was a “buy at $160 per share” and that, “in the long term, buying AAPL at $162 [would] eventually prove to be a smart decision, most likely”.
Wamsi Mohan, from Bank of America, seemed even more bullish than me after earnings day. He currently holds the Street-high price target of $215 on AAPL, suggesting 24% upside potential ahead.
Supporting the analyst’s bullish opinion are a number of factors that range from Apple’s consistency in producing cash flow amid a market environment that favors such ability; to strong demand for higher-end products that helps Apple better deal with supply chain challenges.
One of the most vocal bulls on Wall Street is Morgan Stanley’s Katy Huberty. She raised her price target on Apple to $210, pointing at around 20% gain potential.
The analyst believes that Apple has “the strongest portfolio of products and services in years”, which I tend to agree with. She also highlighted the 1.8 billion devices in Apple’s installed base, which bodes well for service consumption and speaks to the “stickiness” of the ecosystem.
There isn’t much about Apple’s business that Katy Huberty does not seem to appreciate. Looking 12 months out, she sees Apple excelling due to the 5G cycle, the strength in Mac and PCs in general, share buybacks and longer-term opportunities in augmented reality.
Even bears see the appeal
One of the likely reasons why Apple stock has come under “bullish attack” lately is the lack of good arguments on the bearish side. Even analysts that do not have a buy rating on AAPL seemed generally upbeat about Apple’s holiday quarter and prospects for 2022.
Credit Suisse’s Sami Badri, for example, thinks that AAPL is a hold. However, following earnings, he bumped his price target by 12% to $168.
Meanwhile, New Street’s Pierre Ferragu has thrown in the towel. The analyst upgraded Apple from sell to hold, according to TheFly, setting a $165 price target. Pierre previously believed that AAPL could drop 40% to $90 per share — but his bearish call now seems too far from ever materializing.
Is the price right?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
