Bernstein analyst Toni Sacconaghi upgraded Apple’s (NASDAQ:AAPL) rating to Buy from Hold ahead of the Q2 earnings release. Apple stock has underperformed its peers and the broader market due to the slowdown in iPhone sales amid challenges in China, its biggest market. However, the five-star analyst recommends buying Apple stock on this weakness. Further, his price target of $195 implies a 12.39% upside potential.
Sacconaghi believes that the current weakness in China is cyclical rather than structural, indicating no significant long-term concerns. Further, the analyst noted that Apple’s business in China has historically shown high volatility as its customer base remains sensitive to product features. Sacconaghi believes that tailwinds from the replacement cycle and new artificial intelligence (AI) features will support iPhone 16 sales.
Apple to Announce Q2 Financials
Apple will announce its Q2 financials on Thursday, May 2. Wall Street expects Apple’s top and bottom lines to suffer in the short term due to weakness in hardware sales.
Analysts expect the company’s revenue to decline by 4.7% year over year. Moreover, Wall Street forecasts Apple to report earnings of $1.5 per share, which compares unfavorably to the prior-year quarter’s EPS of $1.52.
Is Apple a Buy, Hold, or Sell?
Apple stock is down about 10% year-to-date. In comparison, Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) are up about 7% and 19%, respectively, during the same period. Looking ahead, Wall Street analysts are cautiously optimistic about AAPL’s prospects due to the ongoing weakness in hardware sales, legal headwinds, and slow progress in AI.
Apple stock has received 18 Buys, 11 Holds, and two Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target on AAPL stock is $200.37, which implies 15.49% upside potential from current levels.
Investors should note that Canaccord Genuity analyst Michael Walkley is the most accurate analyst covering Apple stock in a one-year timeframe, according to TipRanks. Copying Walkley’s trades on AAPL stock and holding each position for one year could result in 81% of your transactions generating a profit, with an average return of an impressive 33.20% per trade.
