Apple Has a Case of the Mondays as Analysts Differ on Tech Giant's Outlook

Analysts are mixed about Apple's outlook after the stock touched an all-time high of $300 last week.
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Apple  (AAPL) - Get Report is being pulled in multiple directions Monday after analysts at Needham, Susquehanna, J.P. Morgan and Wedbush published both bullish and bearish notes on the tech giant.

Analysts at Needham downgraded the stock’s outlook to buy from strong buy after the company reached an all-time, post-stock split high of $300 last week. However, the firm also raised its price target to $350 from $280.

Apple remains on Needham’s Conviction List for 2020, despite the firm’s mixed outlook, for numerous reasons including:

  • Apple has “direct relationships” with 900 million of the world’s wealthiest consumers
  • Apple is transitioning to a recurring-revenue business model through its services push
  • Apple is a gatekeeper in the app space through the App Store
  • Apple benefits from a compensation structure that drives valuation upside

Meanwhile, analysts at J.P. Morgan maintained their overweight rating on Apple thanks to a favorable outlook on iPhone and services revenue relative to investor expectations, catalysts to accelerate revenue growth, and upside risk to its base forecast for +14% earnings compound annual growth rate.

“We see upside on several aspects of the business as well as financials that remain underappreciated by investors, namely the transformation of the company to Services, growth in the installed base, technology leadership, and optionality around capital deployment,” wrote analyst Samik Chatterjee.

Analysts at Wedbush were bullish on Apple’s iPhone 11, saying that the current iPhone cycle has legs with a chance to overperform thanks to pending 5G wireless upgrades in 2020. As a result, the firm has a bull case of $400 on the stock.

“iPhone 11 strength appears to have legs both in the U.S. and China as installed base demand continues to look healthy into the March/June quarters with the drum roll into the highly anticipated 5G upgrade cycle in September. China iPhone demand is steady despite the noise and remains one of the linchpins of success for Cupertino around the iPhone 11 upgrade cycle with this smartphone release unleashing a new stage of demand for Apple in this key region,” according to analyst Daniel Ives.

Analysts at Susquehanna were bearish on the launch cycle of the company’s smartphone 5G offerings in 2020, with analyst Mehdi Hosseini saying that the second of the company’s two 5G product launches will be delayed until December or January.

"The delay in the launch, according to our checks, stems from Apple's decision to in-source the Antenna-in-Package (AiP) modules instead of purchasing from the 3rd party," Hosseini wrote. Susquehanna is modelling for 60 million 5G phone shipments in the second half of 2020 despite the expected delay. 

Apple shares fell 0.81% to $295.02 in premarket trading Monday.