- Year to date, Apple Inc. shares are down more than 10 per cent
- In April, Apple lost its top spot on the global smartphone list, replaced by Samsung
- “There are still current estimates suggesting that Apple can return 50 per cent this year” Brianne Gardner, senior wealth advisor at Velocity Investments and Raymond James, says
- A Morgan Stanley analyst forecast that the Vision Pro VR headset could generate $4 billion in revenue by fiscal year 2027
Apple Inc. (NDAQ:AAPL) is losing ground as one of the Magnificent Seven. So far this year shares are down more than 10 percent, with one of the biggest hits coming from Asia.
This month, Apple lost its top spot on the global smartphone list, replaced by Samsung. And Apple is holding third place in the Chinese smartphone market, according to estimates from Counterpoint Research.
In China, Vivo and Honor outpaced Apple’s sales that dropped from 19.7 per cent to 15.5 per cent. Huawei is right behind Apple with 15.5 per cent, and its sales soared by almost 70 per cent compared with the first three months of 2023.
Senior wealth manager, Velocity Investments, Raymond James Canada, Brianna Gardner acknowledges that “Apple hasn’t been so magnificent this year.” She also points out,
“I see every company even as big and famous as Apple is bound to encounter problems sometimes.”
Gardner notes the stock has knocked off almost US$25 since January and faced multiple negative revisions.
“So those negative revisions have kind of resulted in what’s known as compression, whereby ratios and multiples shrink,” Gardner says.
Despite the compression, she believes some reasons to be bullish about the stock still prevail moving forward. Some of those include the iPhone strength in the United States and European Union as well as the launch and early adoption of Apple Vision Pro. Gardner also points out that shares are trading at a lower price-to-earnings ratio than its five-year average, which “is an interesting entry point from our opinion.”
“There are still current estimates suggesting that Apple can return 50% this year, ” she says, pointing out the important push from its artificial intelligence business. “We believe that will be fundamental to its success.”
In first 10 days of preorders for the Apple Vision Pro, Apple sold out 200,000 VR headsets. Gardner adds that, “Considering it is the cheapest model, cost is around US$3,500, (and) this means 700 million of revenue already.”
As well, a Morgan Stanley analyst released a forecast that the Vision Pro VR headset could generate $4 billion in revenue by fiscal year 2027. Gardner calculates that if the VR headset “achieves a 1 per cent penetration of the current iPhone user space within five years, revenue could soar to potentially $40 billion.”
Gardner concludes that Raymond James has a price target of around US$195, an almost 15 per cent upside. She adds that, “39 analysts, covering the stock (are) ranging from US$158 to US$250.
Apple Inc. (NDAQ:AAPL) stock closed at US$169.02 Wednesday. Earlier this year, Apple shares jumped on Bank of America “buy: rating.
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