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Valued at a staggering market cap of $3.4 trillion, Apple Inc. (AAPL) operates in the technology sector, designing and manufacturing smartphones, personal computers, tablets, and wearables. The California-based tech titan serves a diverse customer base through its retail and online stores, direct sales, and third-party distributors.
Shares of this mega-cap stock have underperformed the broader market over the past 52 weeks. AAPL has gained 13.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 20.5%. In 2024, this gap has narrowed, with AAPL stock up 15.4%, almost in line with the SPX's 15.8% gains on a YTD basis.
Narrowing the focus, AAPL has also underperformed the S&P 500 Technology Sector SPDR's (XLK) nearly 23% gains over the past 52 weeks. However, the stock has outpaced XLK's 13.7% return on a YTD basis.
Apple's underperformance relative to the broader SPX is due to concerns about its slow rollout of AI services and a significant drop in iPhone sales, exacerbated by market share losses in China to a resurgent Huawei. Additionally, weak revenue reports and a lack of major upgrades to its flagship devices have further pressured its stock performance.
However, the stock popped nearly 6% following the company announcement of a record $110 billion share buyback program, the largest in its history, and a 4% increase in its cash dividend. Plus, Apple beat Q2 earnings forecasts on May 2 and provided positive guidance, projecting low-single-digit revenue growth for the current quarter.
For the current fiscal year, ending in September, analysts expect AAPL's EPS to grow 7.8% year over year to $6.61. The company's earnings surprise history is promising. It beat the consensus estimates in all of the last four quarters.
Among the 30 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 20 “Strong Buys” ratings, three “Moderate Buys,” six “Holds,” and one “Strong Sell.”
This configuration is more bullish than three months before, with 16 analysts suggesting a "Strong Buy."
On Jul. 15, Morgan Stanley (MS) raised Apple’s price target to $273 and maintained an "Overweight" rating, citing the potential of the new AI initiative, Apple Intelligence, to boost device sales and enhance competitiveness. The firm's optimistic projections of nearly 500 million iPhones sold over the next two years have fueled the stock’s rise to an all-time high.
The mean price target of $232.22 represents a premium of just 4.6% to AAPL's current levels. However, the Street-high price target of $300 implies a modest potential upside of 35.1% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
