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Apple Stock: JPMorgan Lays Out the Bull and Bear Case

4 years 7 months ago

Reflecting the market’s 2022 woes, Apple (AAPL) shares sit 8% into the red year-to-date, despite reporting what JPMorgan’s Samik Chatterjee calls a “robust” F1Q earnings report.

With the continued macro disruptions taking center stage, it is hard to tell what the rest of the year has in store. Nevertheless, Chatterjee set out to gauge current sentiment on all things Apple, holding a recent buy-side survey.

While it only had 15 participants, which the analyst concedes is “arguably not the best sample size,” Chatterjee thinks the survey can provide an indication of “where the Bull and Bear case for Apple lies in relation to FY22 performance and what will be the drivers of performance for the shares.”

Let’s take a look at some of the findings.

For one, the bull case rests on sustaining F1Q’s revenue growth and reaching double-digit revenue growth again.

Apple delivered a revenue uptick of 11% in the quarter. Sustaining that figure would demand from the tech giant “execution-led upside to implied guidance for F2Q growth in the mid-single digit percentage.” It will also mean the company will have to out do consensus growth rates in the following quarters of F3Q and F4Q. Less than 5% year-over-year growth will be fodder for the bears.

The bulls will be satisfied with high-single to low-double digit revenue growth for the iPhone. However, most respondents do not see Apple’s flagship product generating more than mid-single digit growth, suggesting the +9% growth in F1Q is “unlikely to be sustained.”

Going by Chatterjee’s conversations with investors, the bear case calls for a drop in iPhone revenue in FY22. However, Chatterjee thinks iPhone SE demand combined with a “stronger than expected mix” as well as volume upside from the iPhone 13, could lead to a better performance than his current forecast of modest 4% YoY revenue growth.

So, what are the analyst’s main conclusions?

“The survey results indicate that the sentiment on Apple shares and the likelihood of outperformance this year relative to other Big Tech stocks remains balanced,” said the 5-star analyst, “with about only half of the respondents expecting Apple shares to outperform other Big Tech stocks.”

To this end, Chatterjee reiterated an Overweight (i.e. Buy) rating, backed by a $210 price target. The implication for investors? Upside of 29%. (To watch Chatterjee’s track record, click here)

Overall, Wall Street would tend to agree with this bullish outlook – as shown by the 24 to 5 breakdown in recent analyst reviews, favoring Buys over Holds and supporting a Strong Buy consensus view. The stock is trading for $163.17 and its $193.32 average price target implies an upside of ~18% in the next 12 months. (See Apple stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Buying Stocks in a Down Market

4 years 7 months ago
Between President Joe Biden's State of the Union Address and Fed Chair Jerome Powell testifying before the U.S. House Committee on Financial Services, there are multiple investing-related stories coming out of Washington, D.C.
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