Apple faces regulatory pressure and other unknowns
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Investment firm Bernstein recommends to clients buy Apple and expects issues such as declining iPhone demand in China to be cyclical, especially with AI-powered iPhones.
Bernstein's position contradicts that of JP Morgan, which expects support for Apple from artificial intelligence, but not until 2026 and the iPhone 17. Morgan Stanley said it was bullish on Apple, but lowered its share price.
Bernstein now maintains its $195 price target but upgrades Apple to outperform. Speaking to CNBC, Bernstein analyst Toni Sacconaghi said Apple's current lower share price makes this a good time to buy.
“We think Apple is a great consumer franchise,” he said. This is a quality compiler and stock that probably controls or sells the most important thing in most consumers' lives other than their spouse… and we find that we get a discount for it.”
The ability to buy Apple at its current price is the main reason Bernstein upgraded its rating, Sacconaghi continued. He also said that, in hindsight, Bernstein had previously downgraded Apple shares too early.
“We thought it happened too early. expensive,” he said. “But you know the company has done a great job of building out a service franchise and monetizing its installed base of more than two billion devices.” In Bernstein's note to investors, seen by AppleInsider , Sacconaghi also considers the main reason for the decline in Apple shares – the decline in demand for the iPhone in China. He said that it is “more cyclical than structural,” and noted that China has previously been a volatile market. Although Bernstein. really low expectations for Apple's second-quarter 2024 earnings, analyst says the company is entering a seasonally strong period He wrote that in 15 of the last 17 years, Apple shares have performed better in the quarter leading up to the release of the next iPhone.
“We also think the upcoming iPhone 16 cycle will be a good cycle,” Sacconaghi told CNBC. “We think Apple will have an AI-enabled phone and market it aggressively and compellingly to consumers.”
Apple is scheduled to report its next earnings on May 2, 2024.
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