Sign InApple's long-term prospects remain robust amid short-term uncertainties
Summary
Apple Inc. (AAPL), with a market capitalization of $2.70 trillion, experienced a drop in its closing price on October 20, 2023, but still holds positive long-term prospects, making it a Hold for investors with long-term perspectives despite potential short-term turbulence.
Company Overview
Apple Inc. (AAPL) is a NASDAQ-listed technology giant with a significant market capitalization of $2.70 trillion. It has a massive volume of 59.97 million shares compared to an average volume of 58.17 million.
Fundamental Analysis
Apple's closing price on October 20, 2023, was $172.88, a drop of 1.47% from the previous trading day. The stock fluctuated between $172.64 and $175.42 on that day. Throughout the year, Apple has experienced its shares traded as low as $124.17 and as high as $198.23. Apple has 15.63 billion shares outstanding.
The company earns $5.96 per share and trades at a Price to Earnings ratio (P/E) of 29.01. The Efficient Market Hypothesis (EMH) suggests that the stock is currently fairly valued. However, the DCF value stands at $174.33, slightly higher than the latest closing price.
Technical Analysis
Apple's 50-day Moving Average ($177.66) is higher than both its 200-day Moving Average ($169.28) and its last closing price ($172.88), an indicator of a short-term bearish trend. The stock's RSI14 of 48 suggests it is nearing oversold territory.
The MACD (3-month) of 0.41 and the ATR of 1.85 could be pointing to increased volatility. The stock has support at $171.96 and resistance at $177.97.
Analyst Ratings & Outlook
Analysts are overall bullish with consensus ratings leaning towards a "Buy". Out of 33 ratings, there are 23 "Buy", 9 "Hold", and 1 "Sell". The consensus price target stands at a median of $195, with a high target of $240 and a low target of $110.
Recent News & Earnings Reports
Scheduled to announce its earnings on October 25, 2023, analysts' anticipation loom about possible Q4 earnings misses. Some analysts argue that the current earnings multiple makes the stock less attractive, justifying a downgrade from "Buy" to "Sell".
On another note, there are concerns about supplier Foxconn involving tax and land-use investigations. Furthermore, Apple aims to invest $1 billion annually to advance its AI capabilities, potentially creating future growth.
Final Evaluation
Despite mixed news and some concern over the Q4 earnings, Apple still has positive long-term prospects. If Apple's planned investment in AI plays out positively, it would drive innovation and potentially improve margins.
For the next trading day on October 23, 2023, the predicted price should lean towards the DCF valuation at around $174. Considering the technical indicators, the price could range between the support and resistance levels ($171.96 - $177.97).
Looking at the upcoming week, we could expect a similar pattern unless dramatically influenced by the earnings announcement or other news. Given the earnings risks and slightly lower valuation using DCF, it may face turbulence in the short term. Long-term prospects remain robust.
Therefore, Apple is a Hold for investors with long-term perspectives, but they must navigate short-term uncertainties wisely. It's a promising choice for those who believe in the company's ability to innovate and generate future growth. However, short-term investors might want to wait for the quarterly earnings announcement and potential market reactions before initiating positions.
