Apple ‘s strong brand and wide margins gives its stock healthy upside from here, even after the summer rally for stocks, according to Credit Suisse. Analyst Shannon Cross assumed coverage of Apple on Tuesday, raising Credit Suisse’s rating on the stock to outperform from neutral. Cross said Apple was a top pick in the tech hardware sector. Cross said in a note to clients that the company’s large user base gives Apple a solid foundation for stable and consistent growth. “In our view, Apple’s installed base of > 1.8B devices: (1) accelerates market adoption of the company’s services and software offerings and (2) creates stickier customer relationships with higher wallet share, which fortifies the company’s ecosystem,” Cross wrote. Because of the services growth that the large user base helps promote, Apple’s margins can get even wider from here, Credit Suisse said. “We estimate gross margin will continue to trend around 43%, with inflation and currency headwinds offset by higher Services revenue (growing double digits) and vertical integration of components. Net of macro challenges, we expect gross margin to continue to trend up,” Cross wrote. Credit Suisse set a price target of $201 per share for Apple, which is 16% above where the stock closed on Tuesday. Apple has held up better than the broader market in 2022 and is now down less than 3% for the year. The stock has gained nearly 25% since mid June. The iPhone maker has a market cap of more than $2.7 trillion. According to her LinkedIn profile, Cross joined Credit Suisse in April 2022 after 20 years running her own Cross Research and five years at Merrill Lynch in the late 1990s and early 2000s. — CNBC’s Michael Bloom contributed to this report.
