Bank of America Upgrades Apple Stock to ‘Buy,’ Says Low Price ‘Presents Opportunity’ for Investors
Apple’s dark days might be coming to an end, says one Bank of America analyst.
According to a new report from CNBC, Bank of America analyst Wamsi Mohan changed his stance on Apple by upgrading the stock from “neutral” to “buy,” suggesting that the current level of the Cupertino company‘s share price “presents opportunity” with multiple signs of growth from both its healthcare and Services businesses.
Here’s what Mohan had to say about Apple’s stock status:
AAPL stock is down 26% from its peak (S&P down 9%) and up 9% YTD (inline with S&P 500 and below the [tech sector’s return] of 13%). Our scenario analysis suggests that shares are discounting a “declining hardware” scenario (ex-cash, services), and the debate hinges on the L/T trajectory. In our opinion, weakness in hardware is not entirely structural. Our new PO of $210 is based on assumptions closer to scenario 2 (flat hardware, and somewhat slower than historical growth in Services).
Basically, while the market as a whole tends to look at Apple’s declining hardware sales as the new normal for the company, Bank of America believes that the company’s hardware sales will be flat in the long run rather than continuing to decline.
Mohan believes that there are other reasons to be optimistic about the future of Apple stock:
[He] listed in the note eight other reasons why Apple is a buy now, including “stability of supply chain order cuts” and “growth across healthcare, wearables and increasing services penetration.”
The analyst also noted that some of the weakness in China could be blamed on the strength of the U.S. dollar and now that China’s yuan has rebounded vs. the dollar this year, it could become a positive for Apple sales in the country.
Mohan also cut his 2020 iPhone unit sales estimate by 5% to 190 million but said 5G upgrades will likely support 2021 deliveries, which he boosted by just over 2.3% to 220 million units.
Apple shares were marked 3% higher by late morning trading Monday to change hands at $178.30 each, a move that would boost the stock’s gain from its early January lows to around 25.4%.