- Gennaio 28, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
With the remote-work and virtual-learning trends accelerating during the pandemic, demand for Apple (NASDAQ:AAPL) products like the iPhone, Mac, AirPods, and iPads has surged.
The technology juggernaut’s stock price has soared in recent years as well. Apple’s market value now stands at a stunning $2.8 trillion and recently topped $3 trillion for a brief time.
A staggering opportunity in services should fuel sales and profit growth
Investors love high-margin, recurring revenue. Apple’s services division produces it in droves.
The number of active iPhone users has likely surpassed 1 billion people, according to Citigroup analyst Jim Suva, and doesn’t necessarily include the hundreds of millions of additional Mac and iPad users. That provides the tech titan with an enormous global user base to sell its steadily expanding array of service offerings. Apple Pay, TV+, Music, Fitness+, Arcade, News+, Podcasts, Books, and iCloud combine to give users a wide selection to choose from. Apple One, which bundles up to six Apple services into one subscription, offers additional savings and convenience.
These services and bundles are clearly popular among consumers. Apple’s services revenue surged 27% year over year to a staggering $68.4 billion in fiscal 2021, which ended on Oct. 28.
Looking ahead, Wedbush analyst Daniel Ives expects that figure to grow to over $100 billion annually by 2024. In turn, he believes Apple’s services business could be worth as much as $1.5 trillion, or more than half its current market cap.
Some of Wall Street’s biggest names have been stepping up to the earnings plate and none come bigger than Apple (AAPL). The tech giant will report 1QFY22 results on Thursday after the close, and Evercore analyst Amit Daryanani expects the company to meet consensus estimates.
However, as has been de rigueur, what investors will be keen to find out is what does the company expect from 2022. And here, Daryanani has a more measured take on what lies ahead.
“Fundamentally, we continue to think AAPL remains a core mega-cap to own and they are well positioned into H2:22 with several key product launches,” the 5-star analyst said. “Near-term, we think the risk is that estimates take a bit of a pause as Street models for March/June appear to imply a better than seasonal pattern.”
Nevertheless, near-term caution aside, Daryanani thinks Apple remains “well positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.”
As such, the analyst rates Apple shares an Outperform (i.e. Buy) along with a $210 price target. The implication for investors? Potential upside of ~31%.
The rest of the Street has a more modest outlook here, with the $181.40 average target implying shares will gain 13.5% over the coming months. On the rating front, most analysts remain firmly in Apple’s corner; the stock has a Strong Buy consensus rating based on 22 Buys, 4 Holds and 1 Sell.
Present Street models, says Daryanani, are “underappreciating the typical seasonality” the March quarter usually offers. For example, March quarter sales usually drop by 32% sequentially but Street models currently factor in a more accommodating 25% quarter-over-quarter decline. Daryanani’s expectations are also more bullish than the 5-year average, expecting revenue in the $85 billion region, which suggests a 28% drop and accounts for “some contribution from iPhone SE3 in the month of March.”
In addition to the anticipated launch of the SE3 model, the key item to look out for will be the ever-important iPhone outlook. Daryanani notes there have been “some signs Chinese share gains may have slowed.” According to China smartphone data, throughout the quarter there was a notable deceleration in sales, from +88% in October down to +10 in November and turning into negative territory with a -15% decline in December.
Apple stock forecast 2022
The consensus Apple stock price target based on 31 analyst views compiled by MarketBeat gave a cautious tone with the stock expected to slip 0.9% to $173.99 over 2022. The price targets ranged from the high of $210 to the low of $90.
The consensus rating, meanwhile, was still a ‘buy’ at the time of writing, with 23 analysts rating Apple stock a ‘buy’, five ‘hold’, and one ‘sell’ recommendation, and two analysts giving it a ‘strong buy’ recommendation.
Out of 17 firms that rated Apple stock in the last three months, seven have boosted their price targets including Sanford C Bernstein, Citigroup and Morgan Stanley. In December, Bank of America upgraded the stock from ‘neutral’ to ‘buy’.
On the bearish side, none of the firms have lowered their Apple stock price predictions since October, yet some targets suggest a downside, for example Goldman Sachs’ Apple stock price forecast of $142.
Note that analyst predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Long-term Apple stock predictions
Analysts don’t give long-term price targets, yet the algorithm-based forecasting service WalletInvestor suggested the price may hit $262.40 by January 2024 and then go as high as $306.12 by the beginning of 2025.
Over the longer term, WalletInvestor’s calculations put the stock on course to possibly reach $349.71 by January 2026, while the Apple five-year forecast comes in at $391.32.
If it does reach those targets, then how high could Apple stock rise by 2030? That’s obviously too far ahead for even remotely accurate forecasts.
Note that algorithm-based predictions use historical prices for estimations and can be wrong, as past performance does not guarantee future results. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
