Why Apple Could Be At All-Time Highs By Year End

Most investors in Apple (NASDAQ: AAPL) would have been happy with the company simply smashing analyst estimations in their fiscal Q3 earnings report last week, but there’s been ever more bullish momentum generated since. And despite falling 30% from the all-time high they tagged last January through the middle of June, it feels like Apple’s shares are in cruise control and are only going one way.
Though equities in general have been having a good summer, Apple is easily outpacing the broader market, up a full 25% from the lows of June compared to the 13% notched by the benchmark S&P 500 index. While Wall Street was already clearly buying into the idea that Apple stock had fallen a bit too far prior to the release, the company’s latest numbers confirmed that theory last week. Despite consistent macro headwinds in the form of rising inflation, COVID restrictions in China and a surging dollar, they still managed to top expectations. The world's largest company by market cap also said they’re expecting their sales to "accelerate" in the current quarter, leading many analysts to readjust their forecasts for Q4’s numbers to the upside.

Bullish Comments

As Luca Maestri, Apple’s CFO, said with the results, “our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. We set a June quarter revenue record and our installed base of active devices reached an all-time high in every geographic segment and product category. During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans.”

These results, despite the aforementioned headwinds, had the likes of Wedbush’s Dan Ives calling the company's ability to navigate issues a "Top Gun Maverick-like feat”. In a note to clients he said "we would characterize this quarter as a major bullish statement on iPhone demand and Cupertino's ability to navigate a supply chain shortage in an impressive performance." In the same note, Ives maintained his outperform rating and $200 price target on Apple's stock. 

You don’t have to be a math genius to figure out what that price target would mean if Apple was to hit it in the coming months. The company’s all time high share price is a few cents below $183, which means Ives sees them easily surpassing this with their current trajectory. Indeed, from where shares closed on Thursday, this would mean there’s upside of at least 20% to be had. But it’s not just Ives that is calling for fresh highs. Evercore ISI analyst Amit Daryanani, who has an outperform rating on Apple, boosted his price target to $185 a share following last week’s results, noting that the company is "uniquely positioned" to keep seeing mid-to-high single digit sales growth and low-to-mid-teens earnings growth as it continues to pull more levers across its user base. 

Large Upside

And earlier this week, the team over at UBS named Apple on their list of “highest conviction stock picks” for the rest of 2022. With a price target of $185, they wrote "we forecast roughly 235/235 million phones sold in FY22 and FY23 respectively while Services and Wearables should grow materially above iPhone revenue growth over the next several years driven by increasing penetration rates of the iPhone installed base across by both Service offerings and ancillary products like the Watch and AirPods."

With all these bullish comments, backed up by results, it’s easy to see why Apple shares are on such a steep uptrend right now. It should be of additional comfort to those of us thinking about getting involved to see the likes of Amazon (NASDAQ: AMZN) ripping higher too. Jeff Bezos’ company shares are up 40% from their lows in June, adding weight to the argument that maybe, just maybe, the six-month-long sell-off that equities have experienced is running out of steam. 

It will be some weeks yet before we can confirm that, but in the meantime, Apple has done what Apple does best, beat even the loftiest expectations, and embarked on a double-digit percentage rally. If its historic performance is anything to go by, this is simply the start of another multi-year uptrend.