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Apple Inc. (AAPL) Analysis: Strong Technical Position with Potential for Short-term Retracement

StockInvest.us, 3 weeks ago

Apple Technical and Fundamental Analysis of Apple Inc. (AAPL)


Apple Inc. (NASDAQ: AAPL) closed at $192.25 on May 31, 2024, showing a modest increase of 0.50%. The stock has demonstrated significant volatility, hitting a high of $192.57 and a low of $189.91 during the trading day. Apple's current market cap stands at a colossal $2.95 trillion, which firmly positions it as one of the most valuable companies globally.

Technical Analysis

From a technical perspective, Apple appears to be in a strong position. The Relative Strength Index (RSI14) of 73 indicates that the stock is currently overbought, suggesting potential short-term pullback risks. However, the stock has comfortably surpassed both its 50-day moving average ($176.90) and 200-day moving average ($181.16), indicating a prevailing bullish trend.

The MACD for the past three months stands at 8.08, further reinforcing the upward momentum. The Average True Range (ATR) of approximately 1.64 suggests moderate volatility. Immediate support is found at $183.38, while resistance is closely overhead at $192.35. Given the proximity to resistance, a breakout or consolidation could be expected.

Short-term Prediction

For the next trading day (June 03, 2024), the elevated RSI and resistance level imply a potential consolidation or minor retracement. However, given the bullish sentiment, a short-term target hovering around $193 could be achievable if the stock can break through the current resistance. Over the upcoming week, the anticipated AI enhancements announcement at the WWDC could act as a catalyst, potentially boosting the stock towards or slightly above its resistance level.

Apple Fundamental Analysis

On the fundamental side, Apple's current Price-to-Earnings (PE) ratio stands at 29.9, aligning it with tech sector norms. EPS is robust at $6.43, yet it hints at a relatively high valuation. The DCF valuation of $133.88 suggests that the stock is trading at a premium, raising questions about its intrinsic value.

The market consensus shows a confident outlook with a target median price of $195 and a target high of $275. Analysts' sentiments are predominantly favorable, with 24 'buy' and 9 'hold' ratings against just 2 'sell.'

The recently published news indicates a mixed sentiment. While Apple's position in the 'Magnificent Seven' and its historical revenue prowess is impressive, concerns about declining iPhone sales and stiff competition from Nvidia loom large.

Long-term Investment Potential

In the long term, Apple presents a solid investment avenue. Despite the temporary stagnation in 2024 due to tepid iPhone sales, the anticipated AI functionality and potential new product launches promise enhanced growth. However, without introducing a revolutionary product or adopting a substantial AI strategy, revenue growth might remain comparatively muted.

Overall Evaluation

Considering the technical strengths but noting the overbought condition, alongside a robust yet potentially overvalued fundamental profile, Apple Inc. can be categorized as a 'Hold' candidate. The anticipated AI announcements might shift this balance but warrant careful observation. While the stock exhibits solid long-term potential, short-term caution should be exercised due to its current high valuation and immediate technical indicators.

Check full Apple forecast and analysis here.