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Apple received another downgrade this week, the latest in a series of cautious comments against the world’s largest company. This could be an opportunity for new investors. Analysts at Redburn Atlantic downgraded Apple stock from buy on Wednesday, citing limited expansion opportunities and limited upside in iPhone sales. And it’s not just Redburn. Only 57% of analysts covering Apple give the stock a buy rating, according to FactSet data. The figure hasn’t fallen below 60% since July 2020, when analysts were worried about growth in the first year of the pandemic. Notably, only 9% of analysts are short sellers. The roughly 34% who consider Apple a hold are looking for consolidation or an opportunity for earnings to catch up with the stock’s share price after a very strong 2023 performance. Apple soared about 48% last year amid an incredible stock rally in the technology sector. Cautious Calls in 2024Here are his four other cautious calls for Apple that weighed on the stock and were the only two positive sessions for Apple in the past eight years. Here’s a breakdown. Barclays lowered Apple’s rating from hold to underweight (sell) on January 2, the first trading day of 2024. Analysts at the bank argued that hardware sales remain weak and services growth has not exceeded 10%. Barclays slightly lowered its price target for the stock from $161 to $160 per share, saying there are limits to its current valuation. “We expect P/E multiples to be under pressure in the new year as we don’t expect the numbers to move higher,” analysts said in a research note. Apple stock fell more than 3.5% on the day. Piper Sandler followed suit on January 4, downgrading Apple stock from buy to neutral. The company lowered its price target from $220 to $205 per unit, citing “valuation concerns and broad-based device and macro weakness in the first half of 2024.” The stock, which had already been on a three-session losing streak at the time, fell for four consecutive days. Bernstein on Monday reaffirmed its ratings of the company unchanged and reiterated its price target for Apple at $195 per device. Analysts said that while the stock deserves a premium multiple, “valuations look high compared to consumer stocks that are also of high quality but may have less disruption risk.” Bank of America remained in the Hold camp on Tuesday. Analysts reiterated their price target for Apple at $208 per device, adding that “positive news from new product launches and iPhone stability are offset by a potentially weaker consumer spending environment.” Most cautious analysts disagree with his valuation of Apple in 2024, which is a good time to own Apple. The stock is trading above its average forward price-earnings ratio (P/E) over the past five years. This is a factor we recently highlighted in another commentary. But history has shown us that when there are a lot of analysts on the street watching Apple’s case, it’s a good time to get some exposure. What if the Vision Pro mixed reality headset turns out to be a bigger success than people think, resulting in upward service revenue in 2024 compared to current estimates? What happens if Apple’s ecosystem becomes even more powerful than it is now? The big question for investors is, of course, what happens next? We sold some of our shares in Apple on January 2nd and downgraded the company’s name to a 2 rating. But that doesn’t change our belief in Apple: own it, don’t trade it. Jim Cramer said it best after the sale: “No one was ever hurt to make a profit.” “These guys are shit. [Magnificent Seven] “The companies are very good,” Jim added at the time. “They always seem to come up with something more attractive than we thought.” “They make money,” he stressed. Discipline trumps belief. What does this mean? In this case, discipline is about taking profits and not letting the position get too big, and faith is about “owning it and not trading it.” Ultimately, I would like to run a diversified portfolio that can perform in a variety of market conditions, rather than an Apple fund. A rating of 2 is certainly in the Hold camp, but for those who aren’t, this stock is very interesting. Own stock in this best-in-class company. It may sound like we’re speaking out of both mouths, but all investing is nuanced and everyone’s situation is different. A weight above 5% has Apple in the portfolio and on a low cost basis, we would need to see a bigger pullback before considering adding to the position. Even if such a decline does not occur, our current exposure is already large enough to allow us to profit and maintain a diversified portfolio. Even if you don’t buy more, if Apple stock rises further, your portfolio exposure will increase. For investors who don’t own Apple, there may be a chance to grab that small starter position. That way, even if a big pullback doesn’t happen, you’re still getting something, you’re making money on the upside, and you avoid the risk of FOMO (fear of missing out) feeling like the stock should rebound. can. to an all-time high. The practical takeaway: How investors who don’t own Apple should get exposure now before the stock returns to all-time highs (less than 6.5% from current levels around $186) It is to judge whether If you already own Apple stock, you should consider your cost basis when considering increases and buy it last. After all, the goal of subsequent purchases is to reduce overall costs. If there is no exposure, the first price level to look at is around $181 per share. Why $181? This represents his 200-day moving average. This level has proven to be support for the stock price since February 2nd. Since then, we’ve seen Apple stock fall several times, but only for brief periods of time, and never for more than a week or so, as seen in the chart below. Although our club doesn’t place much emphasis on technical analysis, the 200-day average is an important indicator used by many investors, traders, and technical analysts alike. So when a stock that we love for fundamental reasons (and that’s important – we wouldn’t even bother looking at the chart if we didn’t love the stock already) reaches that critical level, this technology indicators are worth considering. Especially if the transaction is a first purchase or helps reduce your overall cost base. Back in October, we explained more about how technical analysts can inform buy and sell decisions. In this case, the $181 level represents a pullback of approximately 10% (implying correction territory) from the all-time high of $199.62 reached on December 14, 2023. Also note that these three peaks were around $180 back in 2021 and 2022. That was the level of resistance at the time. As previously stated, resistance, once broken, is considered support, and support, once broken, is considered resistance. This is known as the principle of polarity in technical analysis. This is clearly an important battleground level, but with the stock trading above it and also representing the 200-day, the move now is to look for support at these levels. Therefore, it can be a good starting price for your first purchase. The next level of interest based on the chart is around the $165 to $175 level, or $170. As you can see in the chart above, there were three troughs around that point before the rally to a new all-time high. If you’re coming in at $181, you probably want to wait and see if a second purchase moves you from the middle to the lower end of the region. Similarly, it will be your goal with every purchase after your first purchase. One is to reduce the overall cost base. However, one thing to keep in mind is that reaching this level will put it below its 200-day moving average, leaving it in somewhat of a no-man’s land. In other words, you don’t have to make a “statement purchase.” You can reduce the base, but don’t think about becoming a hero, because lower levels will definitely affect you. From there, we’re looking at around $160, which is notable given the stock’s five-year average P/E of approximately 24.2x, based on calendar year 2024 earnings estimates of $6.70 per share. Worth it. This $160 level also represents a 20% decline from its all-time high (bear market territory for the stock). This is also the level at which Barclays, one of the most bearish companies to watch, lowered its price target as part of its downgrade to a “sell equivalent” rating in early January. Conclusion Historically, it’s been a good time to buy a stock when too many analysts are no longer interested in what Apple is doing. For investors who don’t own Apple stock but want to get in, or who can lower their cost base, $181, $170, and $160 per share are important levels to watch. We think so. Of course, we can’t simply stick to this price. If they are achieved, it is necessary to consider whether something fundamentally changed. If something like that happens, we both intend to keep our members up to date and may update the rating if it is lowered for no underlying reason. there is. (Jim Cramer’s Charitable Trust is long AAPL. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you receive trade alerts before Jim makes a trade. I will receive it. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing the trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
ANKARA, TURKYE – JANUARY 1: This photo illustration shows the Apple logo on a computer screen in Ankara, Turkiye on January 1, 2024. (Photo by Berke Bayur/Anadolu via Getty Images)
Anadolu | Anadolu | Getty Images
apple received another downgrade this week, the latest in a series of cautious comments against the world’s largest company. This could be an opportunity for new investors.
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