Apple shares have lagged the market so far this year, up 6% for the year through Friday, trailing a 17% rally in the S&P 500. But the stock is moving higher Tuesday as attention turns to the fall launch of the iPhone 13.
Apple was up 1.4%, at $141.98, in recent trading. The S&P 500 is down 0.5%.
J.P. Morgan analyst Samik Chatterjee reiterated his Overweight rating on Apple shares (ticker: AAPL) and lifted his target price to $170 from $165. He writes in a research note that the stock’s underperformance year to date reflects a lack of catalysts for the stock. But he notes that demand for iPhone 12 has “remained relatively resilient”—and he points out that Apple shares typically outperform in the July-September period heading into the annual fall announcement of new phones.
“We believe the setup is attractive and Apple shares are positioned for a significant outperformance over the next 2-3 months given the first half underperformance,” plus near-term upside from recent market share gains for the iPhone 12, in particular in China, he writes.
The analyst argues that current low investor expectations for the iPhone 13 sets the stage for strong performance by the stock after the launch of the new phones. He thinks demand will outstrip current forecasts. Chatterjee sees echoes of the iPhone 11 launch—expectations at that time were low, with investors looking a year out to the iPhone 12, the company’s first 5G-capable phones. But the iPhone 11 sold better than most pundits had expected.
Meanwhile, Loop Capital analyst Ananda Baruah writes in a research note that checks with the supply chain find that Apple has lifted its iPhone build plans for calendar 2021 to the 220 million to 225 million range, from a recent 205 million. (Apple never comments on its manufacturing plans or unannounced products like the next iPhone.) He maintains his Buy rating on Apple shares, though he trims his target price to $150 from $160.
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On a separate note, Evercore ISI analyst Amit Daryanani reports that Apple’s App Store developer revenue was up 23% in June, accelerating from gains of 13% in May and 18% in April. That brings overall growth for the quarter to 18%, down from 32% in the March quarter. Nonetheless, he fears that Street estimates for services revenue growth for Apple’s June quarter overall are too high—consensus is for 23% growth, down from 27% in the March quarter. He’s looking for 19% growth.
Daryanani remains a long-term bull on Apple shares, keeping his Outperform rating and $175 price target.
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