Analysts give Apple's AAPL stock a vote of confidence for the second time this week. On Monday, Goldman Sachs Michael Ng started coverage of the iPhone maker with a Buy rating and price target of $199, and now Wedbush analyst Dan Ives is raising his price target on the stock from $180 to $190.
In a note to investors, Ives said that supply-chain checks out of Asia show that demand is increasing for Apple's iPhone. That is especially true in China, which saw a decline in the prior quarter due to COVID related lockdowns in the region. In 2022, China made up about 18% of Apple's sales.
Ives wrote in his note that we are seeing no major unit cuts from suppliers in Asia around iPhone production, which is a good sign that there is a steady demand curve on the flagship iPhone 14 Pro in March June and goes against the negative investor sentiment on Apple and broader tech in this Federal Reserve and Chairman Jerome Powell driven narrative.
Ives pointed to Apple's services business as a potential catalyst for the company, saying that he expects the segment growth to reaccelerate into the double digits.
Ng pointed out the importance of services as a means for Apple to grow its business.
For his part, Ives believes that Apple's services business is worth roughly $1.2 trillion to $1.3 trillion for Apple's sum-of-the parts valuation and is under-appreciated by Wall Street.
The analysts are banking on services and that isn't the only thing the analysts are banking on. Ng believes that Apple will continue to grab market share from Android-powered competitors in both mature and growth markets. Ives pointed to iPhone 15, Apple's upcoming AR VR headset and new Mac hardware as potential boons for the company's share price in the coming months.
Apple suffered a setback in Q1, as revenue fell 5% year-over-year due to the strong dollar and COVID lockdowns in China that hindered iPhone production.
In an effort to boost its juice sales, Apple introduced a new yellow version of its iPhone 14 and iPhone 14 Plus on Tuesday. The iPhone 14 PlusiPhone 14 Plus is a weak point for Apple, with consumers choosing to either buy a standard iPhone 14 or jump to the company's pricier Pro models.
The iPhone 14 Pro, which starts at $999, is just $100 more than the $899 iPhone 14 Plus, but it has a better processor and camera setup, making it more attractive for consumers.
As for Apple's upcoming headset, there is no guarantee that the AR VR gear will be a smash hit. According to The Verge, people who bought one of Meta's VR headsets in recent months are using it less often than those who bought them earlier in their life cycles.
That could mean that earlier adopters are simply more interested in the technology, while mainstream consumers aren't particularly attached to it.
If it is going to drive consumer interest, it will need its headset to be a truly impressive product. We will find out more later this summer when the company is expected to reveal the product.
Email Daniel Howley at dhowley yahoofinance.com.