No Surprises As Apple (NASDAQ: AAPL) Moves Back On Top

Even when their shares were trading down close to 20% last month from last year’s all-time high, there would have been few on Wall Street truly concerned about Apple’s (NASDAQ: AAPL) prospects. For the most part, it can be said they were dragged lower by the risk-off sentiment that washed over equity markets in the first quarter of this year, while fundamentally there was little change to Apple’s longer term potential. Now, with the major indices after logging some of the best weeks in recent years, the talk has started to turn to when we will be seeing new highs, versus new lows.

With that swing, Apple shares have rallied more than 18% and are only a single good green day away topping the all time high they set towards the end of December. For those of us on the sidelines, there are still plenty of reasons to think this could be the opening chapter of a fresh rally in Apple stock.

Building Momentum

For context, in the aftermath of the iPhone maker’s last earnings report in January, Loop Capital called it one of Apple’s “most memorable quarters ever” as they crushed expectations. Even in the face of rising inflation and interest rates, Apple delivered. Since then, the volume from the bull’s camp has only increased, especially as shares sold off with the Russian invasion of Ukraine and volatility took over stocks in general.

Wells Fargo reiterated their Overweight rating in the weeks before Russian tanks rolled across the Ukrainian border, saying that “the tech giant is at a point of inflection in the enterprise space, which could boost revenues.” Aaron Rakers noted that Apple is expanding its adoption of as-a-service offerings, including Apple Business Essentials, which is slated to become available for small businesses with less than 500 employees by the spring. In addition, the demographics and expanding support for employees to choose their own devices are working in Apple's favor, as it tends to easily beat out alternatives. 

Then, in the last week of February, analyst Samik Chatterjee from J.P.Morgan reiterated his Overweight rating too, having surveyed 15 buy-side firms and finding that the "sustaining double-digit growth" is the bull case for shares. His $210 price target, which still points to upside of 16% now even after the recent rally, was reinforced by Dan Ives at Wedbush, who felt Apple was still the top tech stock to own two weeks ago. This came after the Federal Reserve gave what the investment firm called a "bright green light" to own oversold tech stocks after it raised interest rates. 

Wedbush doubled down on this then two weeks ago when they highlighted the "stellar" demand Apple is seeing for its iPhone 13 around the world. Even though the company has been hampered by global supply chain issues, they’re still seeing "discernible" improvements and had no problems refreshing their Buy rating. Analyst Dan Ives, who has a $200 price target on Apple stock, noted that these improvements bode well not just for the upcoming quarter, but the next iPhone release as well.

Strong Buy Ratings

And just yesterday, UBS’ David Vogt reiterated his Buy rating, after surveying more than 4,000 iPhone users from four different geographies. He found that U.S.-based upgrades and retention are still high, as 81% of users upgraded from a prior iPhone, up 4% year-over-year. For those of us considering getting involved, the reasons for not doing so are few and far between right now. Apple’s earnings have been among the best of the major tech stocks, and based on the momentum they’ve built over the past quarter, this month’s release is set to be a stellar one too. 

If shares can retake the $180 level, there’s every reason to think they’ll crack on to $200 in the coming sessions. The main risk right now is risk-off contagion dampening the mood, which is something that might develop due to a sudden escalation in the Russia - Ukraine war, or a new COVID variant that rattles investors. You have to be thinking that much of the downside from the Fed raising rates is priced in now, and with Apple shares already back near their highs it’s clear investors don’t see this acting as much of a headwind. There are few surprised that shares are back where they are right now, and there’ll be few surprised when they’re at fresh highs again in the coming weeks.