Apple stock will rise and fall on iPhone 8 rumors and demand for some time to come, and one firm now says it’s factoring in a multi-year cycle for this year’s models, based on the rumor that there will be three of them. It also boosted its price target for Apple stock by $15 per share on greater expectations for the iPhone 8.
Meanwhile, another firm has taken a contrarian view and advises investors to sell Apple stock due to the company’s heavy reliance on Chinese suppliers.
A longer iPhone 8 cycle
In a note dated Jan. 19, Bank of America Merrill Lynch analyst Wamsi Mohan raised his price objective for Apple stock from $125 to $140 and reiterated his Buy rating. They’re looking for an iPhone 8, iPhone 7s and iPhone 7s Plus this year, and they expect demand to surpass supply for a longer-than-typical time frame because of constraints on OLED panels and strong upgrade demand. There’s been debate about whether Apple will use OLED displays in one or all three iPhone models this year based on supply constraints.
Due to the expected supply constraints, the BAML team expects the iPhone 8 cycle to be longer, although they boosted their estimates for revenue and average selling price for the device. In fact, they predict that the iPhone 8 cycle could drive nearly two full years of growth greater than 10%.
In the near term, they cut their estimates, but they still see Apple stock as “attractive” because they believe the recent weakness to be “well understood.” As has widely been speculated, they expect the company to benefit from a “significantly tax advantaged cash repatriation.”
Sell Apple stock??
Earlier this week, Stock Traders Daily analyst Thomas Kee Jr. recommended that investors sell Apple stock, as he sees a 7% “downside objective” on it right now. In a note dated Jan. 17, he noted that the NASDAQ 100 faced a long-term resistance test last week as shares of Apple showed strength at the beginning of the year. This is why he believes Apple stock, the NASDAQ 100 and Amazon stock as well could pull back by about 7% from where they are currently.
However, he doesn’t recommend shorting Apple stock right now because his downside projection is less than 20%. He also warned that both Apple and Amazon could pull back “relatively aggressively if the NASDAQ 100 itself begins to pull back.”
Donald Trump was inaugurated as the 45th President of the United States today, and he sees this as another reason to sell Apple shares. He expects all companies that rely on Chinese suppliers—of which he says Apple is chief of—to face pressure under the Trump administration. He warned that if Trump does show signs of being able to trigger a trade war with China, starting with labeling the country a currency manipulator, there could be even more negative consequences.
Shares of Apple stock edged upward by as much as 0.07% to $119.86 during regular trading hours on Friday.