Apple is having a rough week ahead of the expected launch of the iPhone 15. Stocks were lower on Thursday, extending the previous day’s losses.
Investors are weighing the potential hit.
Apple shares were down 3.4% at $176.77, marking a second straight day of losses. Shares are up 41 percent this year through Wednesday’s close but are down 10 percent from their July 31 high of $196.45.
Since Tuesday, Apple’s stock’s slide has shaved $200.4 billion off its market value, down to $2.76 trillion by midday Thursday.
The question is where the stock will go. Both technical analysis and business fundamentals indicate potential losses.
John Rock, senior managing director at 22V Research, argues that Apple stock could fall to $150 based on the company’s stock chart and past corrections since the discovery.
Apple’s average price adjustment over the past decade has been around 35% at Rock. He does not argue that it will happen again this time: such a failure will put Apple below $ 130. But Rock said the stock’s weekly upward momentum peaked in late July and has since faded, suggesting a mild correction in the frame.
For investors who prefer to rely on fundamentals, the math surrounding Apple’s risk in China is worth a look.
The Wall Street Journal reported Wednesday that a ban on iPhones limited to employees of Chinese government agencies would equate to fewer than 500,000 units, Wedbush’s Daniel Ives said. Apple said about 45 million iPhones could be sold in China in the next 12 months as it makes “huge stock gains” in the country, partly due to the iPhone 15.
Ives has a 12-month price target on Apple shares of $230. He rated it as Outperform.
The math could change if a report from Bloomberg that China is expanding the ban from central government officials to employees of state-owned companies is correct. That could extend the restrictions to millions more people, though it’s unclear how aggressively Chinese authorities will impose the restrictions or for how long.
Analysts at Evercore ISI said it was unclear how much of an impact this would have. It may be more than just a headline issue that materially affects financial performance, they added, and maintained their Outperform rating and $210 price target.
According to Evercore ISI analysts, China represents 19% of Apple’s revenue and in 2018 “It’s going to be difficult,” he said, as he supported more than five million jobs in China in 2019 [Chinese Communist Party] “To take more material action against Apple without affecting Chinese operations.”
Evercore China strategist Neo Wang wrote that while the iPhone ban would extend to strategically important companies with hundreds of thousands of employees, any ban would be limited to senior executives involved in strategic planning and decision-making.
Apple could draw Beijing’s ire by moving supply chains out of China too quickly or at a rate that makes officials uncomfortable, Wang said. If so, it’s no surprise that Beijing has chastised Apple for overplaying the “security” card.
Huawei can benefit from any iPhone restrictions. It hopes to capture its market share with the Mate 60 smartphone line, which is priced relatively to Apple’s devices. Huawei’s smartphone business has been hit by US sanctions, which have caused it to lag in key technical capabilities such as 5G connections.
It said Huawei’s partial recovery, taking back 10 million units a year from iPhone sales in China, would hurt Apple’s earnings by 11 cents in 2024.
BofA
Security analysts. However, if Apple loses the 30 million units it has gained since the 2019 ban on Huawei in China, the result would be 34 cents.
Apple is currently forecast to post earnings of $6.46 per share in 2024, according to BofA Securities. In the year As of Thursday morning, the stock traded at about 27 times that forecast. If that ratio remains the same and EPS is 34 cents lower, at $6.12, that would imply a price of around $165.
These are rough calculations only, and that’s not BofA’s core business. They have a price target of $210. The iPhone 15’s launch price could be higher than expected, or China’s restrictions could be less strict than feared.
For now, however, the bears have a leg up when it comes to Apple stocks.
Write to Adam Clark at [email protected]
