Apple shares in light of the latest developments, are they a buying opportunity?

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The article is translated from English on 10/15/2020

Finally, after the original date was postponed, Apple (NASDAQ 🙂 launched its highly-anticipated new phones this week and specifically on Tuesday, to kick off with what many analysts believe will be another super growth cycle for technology geeks.

The California-based company has revealed 4 different models of the iPhone 12, which are: (iPhone 12), (iPhone 12 mini), (iPhone 12 Pro) and (iPhone 12 Bo Max). The prices of the new phones ranged from $ 699 for the mini model with its 5.4-inch screen, to $ 1,099 for the Pro Max model, which shines with a 6.7-inch screen. The company has set the current date of October 23 to start selling the (iPhone 12) and (iPhone 12 Pro) models in stores.

And all four of these devices are compatible with the fifth generation of the Internet, or what is known as 5G, Which can transfer data ten times faster than technology 4G And LTE Current. The new iPhone 12 appeared with a new appearance, and a flat shape reminiscent of the iPhone 4. The prices of these phones are almost in line with last year’s phone prices, although the iPhone 12 mini is less expensive.

The launch event was hosted by CEO Tim Cook. Cook confirmed that support for the fifth generation is coming to the entire lineup of new iPhones. Hans Fitzberg, CEO of Communications Inc. (SE 🙂 Verizon (NYSE :), who also participated in the event, said 5G service will reach 60 US cities by the end of the year.

Fitzberg said his company also operates a network 5G Low-bandwidth in more than 200 cities to offer broad coverage, adding:

“Until now, most people have taken a wait-and-see approach about 5G. They have been waiting for this new technology to become a reality. Today, with the new iPhones, the wait is over.”

Despite the strong desire to use these new models among iPhone enthusiasts, Apple’s stock on Wednesday – the day after the announcement – did not show much enthusiasm, but rather decreased during the session, before closing at $ 121.19, a marginal increase of 0.07%.

But this initial negative reaction did not support the optimistic view of many analysts about the demand that 5G phones could create in the next few months.

The new pricing makes the iPhone more attractive

These expectations, and the success of Apple in increasing revenue from services, helped it become the first public company in the United States to reach a market value of $ 2 trillion earlier this year. Analysts surveyed, conducted by research firm Factt, expect, on average, That the company’s revenue from the iPhone device increased by 15% to reach $ 160 billion in the fiscal year that began on October 1. This is about $ 6 billion less than the record set in fiscal year 2018, when the iPhone X that was selling for $ 1,000 helped boost sales, even as shipments failed to rise to a new level.

In a research report by Piper Sandler, quoted by Bloomberg, analyst Harsh Kumar wrote: “Pricing dynamics is the best app for launching a phone. The price was below our expectations, which is important in light of the current global pandemic.”

Apple has been struggling to revive demand growth for iPhones, as consumers keep their phones for longer periods. After the economic recession caused by the Corona epidemic, this task became more difficult, as millions lost their jobs and closed their businesses. The quarterly revenue for this device peaked in the first quarter of fiscal year 2018. But Apple’s competitive pricing, the first major redesign of the device’s shape in three years, and the appeal of high speeds are things that could push users to upgrade their devices once the global economy is out. Out of slack.

Chinese factor

Analysts are optimistic about sales in China, which is the company’s second largest market in the world. What distinguishes China in addition to that, is that the fifth generation technology there is more widespread and more advanced than in the United States.

Dan Ives, an analyst at Wedbush Securities, estimates that 350 million of the world’s 950 million iPhones currently have an opportunity to upgrade.

In an interview with the network CNBC Specialist, Ives, who predicted the super cycle months ago, said:

“In fact, it has to do with whether Apple can surpass the 231 million units sold in 2015. If it can, we should record this achievement for it as a super-tournament in the Cupertino Hall of Fame (the city where Apple’s management is located). But if the company is not able to do so, then the disappointment will be reflected in the share price. “

Even if Apple fails to generate enough momentum for its new models in the midst of the pandemic and global recession, the diversification strategy the company is pursuing, far from being a company that only produces devices, is one that works well, and provides a good reason to remain enthusiastic about the stock.

With the rise in Apple’s revenues from services, the company is also achieving more sales of device accessories, such as headphones (AirPods) or smart watches (Apple Watch), and this has led to an amazing growth in its business in the field of wearables. During the launch event on Tuesday, Apple also unveiled the first Beats headphones that are compatible with Apple products and have the feature of charging by wires (SE 🙂 USB-CTo replace the company’s products’ Lightning Port. Beats headphones (Flex) will sell for $ 50.

In addition, (RBC Securities) raised its target price for Apple’s stock, from $ 111 to $ 132, and said in the report released on Tuesday that the upcoming (Fitness Plus) service would be a worthwhile addition.

In the (RBC) report, we read:

“In addition to the targeted contribution to revenue and earnings per share, we expect significant opportunities for synergies for Watch / TV / iPad / Services services and see these sections as another way in which Apple can enhance customer loyalty, and most importantly, urge them to repeat operations. the purchase”.

Conclusion

Even after rising 65% this year, Apple stock remains an attractive stock. The company’s innovation machine, growing service sector, and wearables give us strong reasons to feel enthusiastic about the stock, even if the new iPhones don’t achieve the desired results in the short term.





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