Stock Analysis & Ideas

Apple Poised for High-Demand Holidays

After a multi-month rally, the broader stock market might have begun to consolidate and even sell off last week. However, renewed COVID-19 concerns are expected to mostly affect the “reopening” investment plays, and to a lesser extent, tech. The most valuable company in the world, Apple, Inc. (AAPL) took a bit of a hit on Friday, although analysts foresee a long-term opportunity for upside. (See Top Smart Score Stocks on TipRanks)

Providing several factors for his explanation is Daniel Ives of Wedbush Securities. He wrote that the multinational technology firm should continue to see high growth from its iPhone and Airpods holiday sales, despite persisting supply chain woes. The global semiconductor shortage has had investors on their toes when it comes to smartphone producers, although Ives sees it as nearly a non-issue.  

Solidifying his confidence in the stock, Ives rated AAPL a Buy, and reiterated his $185 price target. This target suggests a potential 12-month upside of 17.72% from current levels.  

The five-star analyst noted that approximately one quarter of iPhone users have not upgraded their hardware in three and a half years. This pent-up demand is materializing, and now supply for iPhone 13s is falling short of meeting consumer needs by about 15%.  

Moreover, Ives believes the elevated demand on the “massive product cycle playing out across its entire hardware ecosystem” is miscalculated by investors. Thus, when it comes time for the company to report or update on its business performance, Apple may have an easy beat of expectations.  

Looking beyond its primary smartphone and earphone offerings, AAPL has other opportunities for monetization in its back pocket. The company maintains 1.7 billion devices active globally, a penetration possibly unmatched in brand awareness and loyalty.  

This winter could see Apple converting record iPhone sales, along with record Airpods sales, bolstered by the new Airpods 3 model.  

By looking at TipRanks website traffic data supplied by SEMrush (SEMR), we can identify several interesting macro trends, even during the unreported Q4 period. Quarter-over-quarter, total visits to apple.com have declined 66.33%, a considerable amount. However, over that same period, AAPL’s stock has risen 11.23%. This strong divergence shows that if Apple can hit its sales targets this holiday season, the share gains may not be at their top just yet.  

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article. 

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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