Apple Inc. finally saw a rise in its stock price after a steady decline since the tech giant released its new iPhones, Apple Watch and Apple TV on September 12 this year. The products were given very lukewarm reviews, and that coupled with the high price tags caused the company’s shares to slide.
The company’s stock prices shot up on Monday after Apple was upgraded by KeyBanc Capital. The stocks went up by 1.6% by mid-day trading, taking the stocks to a 4-week high to $159.89 per share. This is still lower than the company’s record high of $164.05 on September 1 earlier this year.
This $2.48 gain gave the Dow its biggest boost on Monday, which went up by 40 points, thanks largely to Apple’s performance. Apple was responsible for adding 17 points to the index’s total.
Andy Hargreaves of KeyBanc Capital raised Apple’s rating from “sector weight” to “overweight”. The analyst had kept his rating of the company at “sector weight” for the last 4.5 months. Hargreaves set a target share price of $187, which is a huge 19% higher than $156.99, which was the company’s closing price last week.
The analyst had downgraded the giant earlier this year in June as he was concerned about the lack of growth in the unit sales of the company’s iPhones. This was due to the seeming delay in production and problems in the fingerprint technology that Apple was working on for the new iPhones.
However, Hargreaves now feels that the company’s shift to a more subscription-based strategy for its iPhones could easily make up the currently lagging sales. Hargreaves said he was still pessimistic about Apple’s ability to push up iPhone unit growth, however, the company’s new strategy could increase gross profit per user above expectations.
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According to him, growth of the App Store and the ability to exercise greater pricing power could really push the subscription-based marketing for the iPhone.
Hargreaves also stated that he believes the company’s most rigid customers will be the first ones to buy the new iPhone X. This, he says will create a favorable atmosphere for investors as they see a spike in the higher priced iPhones in the next few months.
Multiple analysts have expressed their concern about Apple’s flagging iPhone sales since the launch of its new product in September. The feared production delays and the late introduction of the iPhone X in the market has impacted the company’s unit sales. Analysts feel that introducing the iPhone 8 models first impacted the company’s sales further as many users would prefer to wait till the release of the iPhone X in November before making the decision to buy a newer model. This means the company could miss near-term unit sales targets.
Despite these worries and the company’s lack of performance, the market still remains very positive towards Apple. A lot of analysts confirmed their “overweight” and “buy” ratings for the company. According to analyst Michael Olson at Piper Jaffray, moving the sale of the iPhone X to later in the year would actually boost the company’s fourth quarter earnings substantially. He states that he expects the blended retail selling price for the iPhone X (basically the subscription price) would be 32% higher than that of the iPhone 8 and iPhone 8 Plus, meaning that revenues generated would be higher.
The average consensus target for Apple by 36 analysts that were polled is $178.19 with an overall “buy” rating – which is still 13.5% above last week’s close of $156.99.
Apple stocks have grown by 7% in the last quarter, while the Nasdaq gained 4.5% and the Dow jumped 5.9%.