Analysts at Evercore forecast that AAPL stock will gain 5% in the fourth quarter of FY26, based on 31 million units of AR/VR devices. This number is far lower than the actual number and the shortfall is attributed to supply-chain issues in China. Apple’s revenue prospects are limited, but it has a massive market position. AAPL stock is one of the top 10 stocks in the S&P 500, and a significant portion of the market gains are coming from these top 10 stocks.
AAPL stock price target based on Evercore
Analysts at Evercore ISI have raised their price target for Apple to $305 from $180. They cite a sub-20% drop in Japanese App Store revenue as the main reason for the slowdown. Additionally, the analyst noted that Apple Arcade, which launched last September, may also be a factor. While the stock’s price is already up about 20% year-to-date, Evercore sees room for further upside.
Average price target for Apple
In order to predict the price of a stock, investors often use average analysts’ price targets. Typically, the analysts will publish their target prices along with their buy or sell recommendations in a research report. These price targets are also quoted in financial news. There are several factors that go into determining an average analyst’s price target, including the company’s intrinsic value, beta, overall volatility, and other factors. If one analyst misses their target price, it can mean that the stock will have significant upside potential.
Supply-chain issues affecting demand in China
The virus that is spreading rapidly has been taking a toll on companies worldwide. Apple isn’t the only company that’s felt the effects of the virus. Companies across the tech industry have felt the effects, including Volkswagen AG, Microsoft Corp., and Pegatron Corp., which have moved some production to Taiwan or India. However, Western pharmaceutical majors have not yet reported any critical supply-chain issues. Earlier this month, Cipla Ltd., a leading Indian pharmaceutical company, told the Financial Times that without China, its supplies would run out by the end of February.
AAPL stock shortfall blamed on slowdown in China
Apple Inc. has lowered its quarterly sales outlook, blaming the slowdown in China for the shortfall. However, Apple’s problems go far beyond China, with local rivals such as Huawei Technologies Co. gradually eroding Apple’s share of the world’s largest smartphone market. Nevertheless, the company’s latest announcement should keep investors on their toes.
TTM PE ratio close to forward PE ratio of 29x
While both TTM PE and forward PE are relevant indicators of current stock prices, TTM PE is often overvalued as past earnings are discounted in the share price. A forward PE ratio, however, is much more informative of a company’s future prospects as it considers future earnings. Therefore, time series analysis of TTM PE can help identify overheating stocks and provide a more accurate assessment of the market’s valuation.
Forward PE ratio close to forward PE ratio of 29x
One of the most common arguments for the high valuation of U.S. stock prices is the low yield environment. However, the fact of the matter is that the yield on the U.S. 10-year bond has a very long-term relationship with the market PE ratio. When the pandemic hit in 2008, U.S. 10-year yields were at 0.8%. Since then, they have been rising and now sit at 1.34%. Clearly, the rising yields will have a negative effect on current elevated valuations.
TTM PE close to forward PE ratio of 29x
The TTM PE (Trailing Twelve Months) is the current share price divided by the last four quarterly EPS. This PE measures the relative value of a stock, but it has limitations. Companies in different industries trade at different valuation levels. Thus, metal stocks have lower TTM PEs than FMCG companies. But, this does not mean that they are cheaper. Therefore, the use of relative PE overcomes this limitation.