Apple stock (AAPL) – Get Apple Inc. Report is still in the penalty box. Shares of the Cupertino company have been down 22% so far this year (see chart below, blue line), after logging another ugly week of losses at the end of May 20.
But one traditionally bullish analyst is far from giving up on his top pick. Wedbush’s Dan Ives appeared on CNBC, after Friday’s closing bell, to “pound the table” on the investment opportunity that Apple’s recent share price decline has unveiled.
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AAPL down: Ives is still a bull
During a conversation with Dan Ives, CNBC anchor Scott Wapner pressed the Wall Street analyst on his upbeat views of the iPhone maker. Dan cited his channel checks to support the idea that unit sales could be even better than previously expected.
The observation is in line with Mr. Ives’ conviction about the ongoing supercycle that was merely triggered by the 5G transition. The expert has been talking about a wave of iPhone upgrades since at least the time that we spoke, back in July 2021 – but likely for much longer.
In addition to optimism toward device sales, the Wedbush analyst reiterated the importance of Apple’s service segment. He values this business alone at over $ 1 trillion, supported in great part by an increasing installed base and juicy margins.
When asked about the market’s bearish behavior – investors don’t seem to care all that much about company-specific fundamentals in 2022, certainly not in the tech space – Dan looked further out into the future.
The analyst made it clear that there is nothing stopping Apple stock from dipping to $ 125 per share in the near term, for example. But think about the next few months, and Mr. Ives believes that AAPL “will be a stock with a 2 in front of it [meaning, $200-plus] by the end of the year ”.
Is the AAPL bull thesis reasonable?
I have my own thoughts about Dan’s opinions described above. While I don’t have the same visibility into Apple’s channel that the Wedbush analyst does, evidence points to a company that continues to perform surprisingly well during a period of severe supply chain challenges.
I, too, believe that Apple is positioned better than most companies today, at the very least in the tech consumer discretionary arena. The company has proven repeatedly that it (1) remains one of the most admired global brands and (2) knows how to manage inventory and supply chains like no other.
To the bullish argument above, I would add that Apple has historically been a better stock when bought on the dip. Think that AAPL will eventually climb back to all-time highs and beyond? Then, the time to buy shares is now, not when the stock returns to $ 180.
Having said the above, the short-term prospects of this stock look fragile to me. Not that there is something fundamentally wrong with AAPL, but shares are unlikely to sidestep a steeper selloff in the broad equities market if one materializes.
With inflation still white-hot and interest rates rising, the probability of a cool down (if not reversal) in economic growth is not immaterial. If or when consumers feel the pain in their pockets, the discretionary sector could suffer more than others.
All accounted for, I remain an Apple bull, not unlike Dan Ives and his research team at Wedbush. I would just caution shareholders to be prepared for bumps along the road until AAPL can find its footing once again.
Wedbush’s Dan Ives says that Apple will be a stock with a 2 in front of it – that is, $ 200-plus per share, up from $ 138 today. When do you think this might happen?
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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 Apple Maven)
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