Sign InAAPL Faces Short-Term Pressure but Holds Long-Term Growth Potential
Summary
Technical analysis indicates that Apple Inc.'s stock is below its 50-day moving average but above its 200-day moving average, with the 50-day MA potentially acting as a resistance level, while the RSI14 suggests neutrality; fundamentally, the company has a high market capitalization and a high P/E ratio, with target estimations for future growth ranging from $110 to $240, and recent news highlights potential challenges; overall, the stock is recommended as a Hold for the next trading day and the upcoming week, with potential for long-term growth but caution due to short-term pressures and uncertainties.
Technical Analysis
Apple Inc.'s (AAPL) last closing price was $174.91 on October 05, 2023, with an intraday low and high of $172.68 and $175.44, respectively. Despite remaining below its 50-day moving average of $179.70, the stock is well above its 200-day moving average of $166.89, indicating a positive medium-term trend. The 50-day MA may act as a resistance level for any near-term price movements. The RSI14, an indicator of momentum, is 50, suggesting neutrality with neither overbought nor oversold conditions.
The stock has demonstrated support at $174.21 and resistance at $177.56. The MACD, a popular trend-following momentum indicator, is at -3.77 over a 3-month period, suggesting bearish sentiment in the short term. The Average True Range (ATR) is $1.97, indicating relatively moderate volatility.
Fundamental Analysis
Apple Inc. holds a market capitalization of $2.76 trillion, making it one of the highest value stocks on NASDAQ. At the close of the last trading day, AAPL recorded a volume of 25.32 million shares, less than the average volume of 58.37 million shares. It has 15.63 billion shares outstanding.
The firm had an EPS of $5.96, Less than its annual high of $198.23, Apple's recent closing price gave it a Price-to-Earnings (P/E) ratio of 29.61. This suggests a high earnings multiple, indicating that investors may be expecting high future growth from the company.
Analysts' reports show target estimations ranging from a low of $110 to a high of $240, with a consensus target of $189.18 and a median target of $195. These estimations suggest room for growth from the current price. Of the analysts included, 22 recommended a buy, 10 suggested a hold, and 1 advised selling the stock.
In terms of financial performance, Apple Inc.'s earnings announcement is slated for October 25, 2023. Investors should watch for the company's performance figures and financial health.
The Discounted Cash Flow (DCF) model, a method used to estimate the value of an investment based on its future cash flows, projected a value of $177.92, slightly higher than its recent closing price.
Important News
Recent news highlights some important factors affecting Apple Inc. South Korea's regulatory body is considering imposing fines amounting to as much as $50.5 million on Apple and Google, alleging violations of fair competition norms. This could potentially influence Apple's financial performance in the short term.
Meanwhile, individual investor sentiment towards the stock appears positive, as suggested by Zacks.com users paying considerable attention to Apple's shares.
However, with strong jobs data, there are expectations that the Federal Reserve might not halt interest rate hikes soon, a circumstance that could exert pressure on stock valuations.
Conclusion: Stock rating
Taking into account the presented technical and fundamental data, AAPL seems to be potentially facing some short-term pressure due to its current technical metrics and strategic challenges. Nevertheless, the company maintains a robust market position and strong financials, which can support its long-term growth outlook.
Given the analyst recommendations, the company's P/E ratio, and the DCF, there appears to be potential for growth in the long term. Therefore, the evaluation of the stock for the next trading day and the upcoming week would be to "Hold," with a possibility to "Buy" for long-term investment.
Investors should closely monitor the Federal Reserve's decisions about interest rate changes and any regulatory impact due to recent news events. Investors are also recommended to wait until the earnings announcement on October 25, 2023, before making substantive decisions about the stock.
