Apple entered the correction territory and already lost around 15% of its stock value from its recent high at $132.97 per share on July 20. Apple shares are trading $114.36 per share, down by less than 1% around 12:42 in the afternoon in New York today.
Morgan Stanley analyst Katy Huberty believed that Apple Inc. (NASDAQ:AAPL) would not experience a similar stock meltdown, which happened after a huge advance in 2012. Back then, the iPhone maker’s stock price declined by approximately 40% in less than six months.
Huberty emphasized that Apple’s current situation is different, and she gave four reasons that the stock price would rebound.
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- Gross margins are improving, not deteriorating, as the company heads into the next iPhone cycle.
- There’s low institutional ownership of the stock.
- Apple has a more competitive product lineup and a “stickier” ecosystem against Android.
- There’s a more robust product and services roadmap.
Morgan Stanley maintains Overweight rating, $155 price target
Huberty also addressed investors concern regarding Apple’s sales in China. Some investors are worried that the recent stock market rout in the country would have a negative impact on iPhone sales over the next quarters. China is a significant market for the tech giant. During the previous quarter, Apple Inc. (NASDAQ:AAPL) reported that its sales in China declined.
In a note to investors, Huberty wrote, “We don’t expect Apple to be fully immune to [a] weak China, but we’d highlight smartphones over $300 taking share as a sign. Apple Inc. (NASDAQ:AAPL) is converting previously midmarket smartphone purchasers to their platform.”
Huberty noted that the demand for iPhone was approximately 53.5 million units in the September quarter based on data from AlphaWise Smartphone Tracker.
She maintained her Overweight rating and price target of $155 for the shares of Apple.
Apple (AAPL) stock decline is a buying opportunity
On the other hand, Ross Rich, an analyst at Evercore ISI commented that the decline in the stock price of Apple presents a buying opportunity.
“The break below the 200-day is not great. However, ultimately, I think this is going to create a nice summer buying opportunity, and the stock should rise in the fall, said Ross on CNBC’s Trading Nation on Tuesday.
Ross suggested that Apple Inc. (NASDAQ:AAPL) could trim its losses and reach a price target of $152 per share, a 33% increase from its $114 closing price on Tuesday. According to him, Apple is still “structurally sound” and it is poised to climb over the long-term. He said, “Ultimately, this is a stock that can easily regain momentum lost during six months of sideways trading.”