Shining bright: A women uses an iPhone as she passes an Apple logo at the Grand Central Terminal in New York City. Citigroup Inc says Apple’s stock could rise an additional 30%, but the company is less beloved by analysts than its megacap peers. — Reuters
NEW YORK: Apple Inc’s surge this year has officially made the iPhone maker the first company with a US$3 trillion (RM14 trillion) market value, but at least one metric is pointing to a near-term pullback. Already the world’s largest stock, Apple’s 49% rally this year has pushed it to a fresh record, adding nearly US$1 trillion (RM4.67 trillion) in value.
But that rapid resurgence has driven its shares almost 3% above the average analyst price target, according to data compiled by Bloomberg.
Such a situation is rare for Apple, with the most recent occurrence coming more than 18 months ago, which also corresponds with the last time it made an attempt at breaking the US$3 trillion (RM14 trillion) level.
While Apple breached the threshold on an intraday basis back then, it failed to close above it, and that peak marked the start of a downtrend that was exacerbated by high inflation and the US Federal Reserve’s attempt to combat rising prices by increasing interest rates.
While Apple received a new bull call from Citigroup Inc this week, with the firm writing that the stock could rise an additional 30%, the company is less beloved by analysts than its megacap peers.
Just 68% of the firms tracked by Bloomberg recommend buying the stock, compared with at least 85% for Microsoft Corp, Alphabet Inc and Amazon.com Inc.
Furthermore, Apple’s consensus rating, a proxy for its ratio of “buy”, “hold”, and “sell” ratings, is near its lowest since November 2020.
Much of the relative caution reflects concerns over Apple’s valuation. While it screens well on some quality metrics, including its balance sheet and the durability of its earnings and revenue streams, it trades at 30.2 times its estimated earnings for the next 12 months.
That’s above its long-term average multiple, and it is also at a premium to the Nasdaq 100 Index.
Based on its 14-day relative strength index, Apple is at the most overbought level since December 2021, according to data compiled by Bloomberg.
“Apple’s outlook remains solid given their balance sheet and future revenue projects, but these latest gains might be more of a defensive switch for traders who see a US economy that is recession-bound,” said Ed Moya, a senior market analyst at Oanda. — Bloomberg
