Wall Street doesn’t paint a rosy picture for Apple. As per FactSet, analysts have shown little interest in Apple’s stocks in the last 15 years as they have the lowest percentage of buy ratings. This indicates a bearish shift on Apple’s prospects.
On Friday, Apple’s shares closed around $5 away from its average price target of $178.13; it was nearly 30% off its 52-week high. What is the next goal? It is anybody’s guess!
Apple Needs a “Hardware Hit”: Interesting Possibility with Watch as a Medical Device
When the Bank of America upgraded to buy from neutral, Apple shares increased by approximately 2% in Monday’s premarket. This was due to recent pullback in the stock.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, while speaking on CNBC’s “Trading Nation” on Friday, said, “I think it’s basically a repricing of the stock away from a sexy tech stock to, essentially, a stodgy, dodgy, blue-chip-with-a-dividend stock, simply because the growth story in Apple has really petered out”.
Schlossberg further added, “It’s by no means a sour apple, but it’s just [that] the growth prospects here are quite limited, simply because the whole story or the narrative that they’re moving into services, I think, is very problematic.”
Schlossberg highlighted that Apple receives nearly 40% of its services revenue from one source – Google search.
Schlossberg also said, “I think Apple, at its core, culturally, is very much a hardware company. They need a huge hardware hit — that’s what they haven’t had. Until they have one, the growth story’s going to be very limited”.
Schlossberg believes that Apple has an opportunity to develop its watch as a medical device, but it is still an “embryonic market.”
Another analyst, Craig Johnson, from Piper Jaffray, is positive about Apple’s stock and predicting some bullish trends in its long-term chart.
Speaking on “Trading Nation,” Johnson said, “When I look at the charts here on Apple, you can see that [the] stock’s had a nice downtrend reversal. You’re up about 19 percent off the lows. You’re still 25 percent off the highs, and the Street is kind of split: 22 buys, 22 holds and one sell on the stock.”
He also noted, “I think this stock can continue to move higher, and I think from a technical perspective, we can come back and retest that 200-day moving average, which is about $189, $190 at this point in time.”
Johnson added, “I think there’s more room for this stock, ultimately, to work, and I wouldn’t be too concerned about the place marker that the analysts have out there at this point in time, given some of the concerns and changes in the business model they’ve got. I think it’s just been a resetting of expectations, but I think the longer-term picture for Apple is still quite positive.”
Apple has to think beyond streaming services as it is primarily a hardware company. Even as there is saturation in the smartphone market, the tech company has to come up with a ‘hardware hit.’
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