Apple Inc. Stock Stalls Despite S&P 500 Record Highs

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Apple stock and the rest of the technology sector stalled on Monday as investors angled more toward sectors that are likely to benefit from the expected tax reform bills. The S&P 500 reached another record high despite the weak performance of Apple stock, which says a lot because sometimes the iPhone maker’s heavy weight alone is enough to hold the index back.

In search of catalysts for Apple stock

Still, today’s headlines about the iPhone X adoption rate are probably enough to keep its stock from tumbling as far as most high-flying technology stocks, which are down by more than 1% in many cases. Analysts have been advising analysts to buy the dip in these high-flying tech names, however.

Chart technician Todd Gordon told CNBC last week that Apple stock entered an area of “corrective support” in an uptrend parallel channel. That means the shares are neither oversold nor overbought. Gordon pegged the top limit of that channel at around $185 to $190, and he expects Apple stock to hit that this month. That would mean upside of around 10% by the end of the year.

Into early 2018, he looks for Apple stock to be moving into the $190 to $200 range, carrying the company to a market capitalization of $1 trillion.

Limited catalysts for Apple stock

A few analysts have been serving as the voice of reason regarding the iPhone X adoption rate, warning that the model is still extremely scarce. KeyBanc analyst John Vinh warned in a note toward the end of last week that demand for the iPhone X was still questionable because the supply is still so constrained, although it is improving. He said his carrier store surveys in North America and Western Europe indicated that most stores were still sold out of the iPhone X.

Many stores said they haven’t received any more since the launch, and he described replenishment as “spotty and limited.” He said that on average, stores that have been receiving additional stock are only getting about five to 10 phones per shipment, and they usually sell out after they are received.

iPhone X adoption rate similar to those of previous models

Despite the supply woes around the iPhone X, it sounds like the phone might not be doing as badly as one would think. IHS Markit reports that in eight countries, the iPhone X is now more than 2% of the active iPhone installed base. Unsurprisingly, the markets in which the phone is doing well are high-wealth countries. The firm also reports that the iPhone X is doing well in markets where “Plus” iPhone models are popular.

IHS Markit describes the initial iPhone X adoption rate as “very similar to adoption of previous iPhone flagship launches in the same launch period.” In the U.S., the iPhone X adoption rate matched that of the iPhone 8 Plus three weeks after launch and was ahead of the iPhone 8 and 7 Plus adoption rates three weeks after their launches.

Record number of iPhone units expected

The firm expects Apple to sell a record number of iPhones in fiscal 2018 with year-over-year increases in shipment volumes in every quarter. It forecasts sales of 88.8 million iPhones for the December quarter, which would be a new record if Apple achieves it. IHS estimates that Apple only needs to ship 31 million iPhone X units to raise the average selling price of the iPhone above $700 for the first time, which is music to investors’ and analysts’ ears.

What IHS reports regarding iPhone X adoption is interesting in light of how few units carrier stores seem to be receiving. It’s possible that Apple is selling most of those units via its own stores since delivery times are now down to days instead of weeks.

Apple stock ticked higher by as much as 0.37% to $171.71 in intraday trading on Friday.

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