Apple Inc. (AAPL:NSD) 4 Analysts cut targets on worse than expected earnings

Apple Inc Stock Forecast:

Based on the recent forecasts from 32 analysts, the estimated average target price for Apple Inc over the next 12 months is USD 168.25. This is based on the average analyst rating, which is considered a Strong Buy. Stock Target Advisor‘s own analysis of Apple Inc reveals a Slightly Bullish outlook, considering 10 positive signals and 5 negative signals.

Currently, the last closing price of Apple Inc’s stock was recorded at USD 150.82. In terms of performance, the stock has experienced an upward trend over the past week, with a change of +6.32%, +16.08% over the past month, but has declined by -14.23% over the last year.

Apple Inc Earnings News:

Apple (APPL:NSD) reported a drop in its quarterly revenue for the first time in over three years due to disruptions in the supply chain in China, which resulted in delayed iPhone deliveries during the crucial holiday period.

The company generated a total revenue of $117.2 billion in the latest quarter, a decrease of 5.5% compared to the same period in 2021 and below the expected amount of $121.1 billion by analysts. Net profits of $30 billion were 13.4% lower than before and also failed to meet expectations.

Following the news, Apple’s shares dropped by more than 3% in after-hours trading. This revenue decline by Apple coincided with reports from Amazon and Alphabet of a weakening in some of their key markets in the latest quarter. The combined earnings reports from these three major companies offer a warning to investors, coming a day after technology stocks saw a surge from better than expected results from Facebook’s parent company, Meta.

Analysts Coverage Change (AAPL:NSD):

J.P. Morgan maintains Apple Inc. with an Overweight rating and lowers the price target to $175 from $180 on the company’s stock.

Cowen lowers the price target to $195 from $200 and maintains the Outperform rating.

Piper Jaffray Companies reiterates the Overweight rating with a $195 price target.

Raymond James maintains the Outperform rating and lowers the price target to$170 from $185.

Positive Fundamentals:

Apple Inc. stock is a highly attractive investment opportunity due to its several financial strengths. Firstly, the company has a high market capitalization, making it one of the largest entities in its sector and among the top quartile in terms of stability.

The stock has also displayed superior risk-adjusted returns compared to its peers in the sector, demonstrating strong performance even when considering the associated risks. In addition, the stock has low volatility, with consistent and stable annual returns compared to its peers, making it a relatively stable investment. However, it’s worth noting that this stability may also limit returns.

The stock has outperformed its sector peers in total returns over the past 5 years, placing it in the top quartile. The company management has also delivered better return on equity, return on invested capital, and return on assets compared to its peers, making it a highly efficient company.

The company has shown positive total and free cash flow over the past 4 quarters, which is a positive sign for investors. Additionally, the company has a high Gross Profit to Asset Ratio compared to its peers, a measure that is popular among value investors and indicates superior long-term returns.

Negative Fundamentals:

Apple Inc.’s stock is facing criticism due to its high valuation compared to different financial metrics. The stock is trading at a premium compared to its peers based on its price-to-earnings ratio, which is above the sector median. Additionally, its price-to-book value ratio is also higher compared to its peers. Moreover, the stock is also overpriced based on its price-to-cash-flow and price-to-free-cash-flow ratios. It is trading above the median for its sectors in both cases.

Additionally, the company is considered highly leveraged, with a debt-to-equity ratio that places it in the bottom half compared to its peers in the sector. However, it’s important to consider the context behind this, as a company may choose to take on debt to finance growth. Before investing in Apple’s stock, it is advisable to proceed with caution and consider the latest news, sector trends, and management statements.

FA Score (Fundamental Analysis):

The fundamentals analysis of Apple Inc. is “Slightly Bullish” with a FA score of 6.7 out of 10, where 0 is very bearish and 10 is very bullish.

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