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Apple’s First-quarter Earnings Report Analysis
Apple is set to report its first-quarter earnings after the market closes on Thursday. The tech giant has faced numerous challenges in 2024, including weak iPhone sales overseas, antitrust concerns, and a volatile stock performance that has left investors uneasy. Despite these issues, some analysts believe there is still potential for Apple to surpass expectations and see its stock price soar to $250 within the next year.
Apple’s Stock Performance
Apple has historically been one of the top-performing technology stocks, part of a group known as the Magnificent Seven. However, in recent months, the company’s stock has experienced a downturn, dropping 10% year-to-date. This decline can be attributed to regulatory challenges in various markets and a decline in iPhone sales, particularly in China.
In March, the Department of Justice filed a lawsuit against Apple, accusing the company of engaging in anticompetitive practices in the smartphone market. This legal action led to a significant drop in Apple’s market value, with the company losing over $100 billion in a single day. Additionally, demand for iPhones in China has waned, reaching its lowest point since the onset of the COVID-19 pandemic. As a result, Apple, along with other tech giants like Tesla and Google’s parent company Alphabet, has been relegated to a lower status within the Magnificent Seven, giving rise to a new group known as the “Fab Four.”
Despite these setbacks, Apple’s stock remains up by about 2% over the past year.
Analysis of Vision Pro
In February, Apple launched its mixed-reality headset, Vision Pro, but encountered weak demand, leading the company to cut its sales projections for the product in half. This disappointing performance is not unusual in the virtual reality sector, where companies like Meta have struggled to achieve profitability with their VR initiatives.
Critics have pointed to Vision Pro’s high price tag of $3,500 and ambitious promises as potential reasons for its lackluster sales. However, top analysts from Bank of America, Wedbush, and Morgan Stanley remain optimistic about Apple’s prospects.
Analyst Predictions and Stock Buybacks
Analysts from leading financial institutions, including Bank of America, Wedbush, and Morgan Stanley, have recommended buying Apple shares, setting price targets ranging from $210 to $250. These analysts believe that despite challenges in the Chinese market, Apple’s overall iPhone demand remains stable, and the company is poised to exceed Wall Street’s earnings forecasts. Wedbush analysts anticipate a resurgence in Apple’s Chinese sales next year with the introduction of an AI-driven iPhone.
Moreover, Wamsi Mohan of Bank of America has identified Apple’s stock as a top pick for the year, noting that the company is likely to announce stock buybacks. Stock buybacks involve a company repurchasing its own shares from the market, reducing the number of outstanding shares and potentially boosting shareholder value.
Over the past decade, Apple has been the most aggressive tech company in terms of stock buybacks. The company has spent a total of $621 billion on share repurchases from 2013 to 2023, significantly outpacing its competitors. In the last fiscal year alone, Apple spent $78 billion on stock buybacks, decreasing its outstanding shares by around 2%.
Overall, while Apple has faced challenges in 2024, analysts and investors remain optimistic about the company’s future prospects.
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