Apple has been under fire the last few months due to the company’s dependence on iPhone sales. HSBC analyst Erwan Rambourg has been quoted saying that Apple’s unit growth is “broadly over for now”. Rambourg explains that Apple’s revenue growth is only higher because the average selling price of the iPhone is higher than in previous years, and this offsets a decline is sales growth. For this reason, Rambourg has downgraded the company, causing Apple stock price to fall 2 percent.
The analyst also said that investors in Apple shares are “too late to sell, too early to buy”. With Apple stock price nearing its support level, the company saw shares trading at $181.12 (2% decline) on the NASDAQ.
Many of the suppliers that Apple use to produce iPhone components are feeling the stagnation in unit growth of the iPhone. We have seen Japan Display, Lumentum, Qorvo and more iPhone component suppliers cut their November forecasts after news of iPhone production slowdown went public.
HSBC then began to bring up Apple share price, hinting that Apple stock may trade at an increased earnings multiple that is seen more with luxury companies. The general consensus amongst analysts is that Apple shares are not overly-expensive.
This hasn’t been the first time Apple has been downgraded, three weeks ago saw saw Guggenheim Securities downgrade Apple shares from “BUY” to “NEUTRAL”. Guggenheim also shares HSBC’s logic that Apple couldn’t offset a decline in sales growth with higher unit prices. We also reported that Goldman Sachs also cut Apple’s price target just two weeks ago. Last month, JPMorgan also cut Apple’s price target.
Apple Stock Dividend
Investors who are income-focused are losing confidence in AAPL and questioning wether the Apple stock dividend is at risk after the recent performance of iPhone sales.
Because Apple’s current dividend payout ratio is low, the company has no issue paying it out. Even if we see the worst EPS predictions come to fruition, Apple stock dividend will still be safe for the next few years.
If Apple did find itself in a financial hole, it would most likely halt its stock buyback before cutting its dividend.
Apple Stock Prediction
Apple stock price fell yet again on Tuesday after the company announced intentions that it would be using promotional methods to boost iPhone sales over the holiday. These promotional methods include discounts and trade-ins.
The company then went on to lose their title as most valuable company on Monday as Amazon hit the market cap of $866.6 billion.
Our analyst gives Apple stock forecast of $232.50 over the next 12-months.
Our analyst gives Apple a “BUY” rating.
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