Apple stock (NASDAQ: AAPL) has rallied by almost 8% over the last month, trading at all-time highs of about $164 per share, despite the ongoing semiconductor shortage, which has been hurting Apple’s ability to supply products, and also a recent report that Apple is apparently witnessing slower demand for its flagship iPhone 13 devices ahead of the holiday season. This compares to the broader S&P 500 which has declined by about 2% over the last month, partly due to the spread of an apparently highly infectious new variant of the Covid-19 virus, dubbed omicron. So why is Apple stock rallying? The spread of the new virus variant is prompting concerns about the ongoing economic recovery and this could be causing investors to buy into Apple stock, which is considered a safe haven of sorts in times of uncertainty, given its strong balance sheet, relatively stable revenues, and sizable share buybacks that support its stock price.
So, are further gains on the cards for Apple stock? We don’t think so. We value Apple stock at $$159 per share, roughly in line with the current market price. While we think the long-term outlook for Apple looks good, given its quickly growing services and wearables business and continued demand growth for its computing products, the near-term picture could be clouded by the Federal Reserves’ increasingly hawkish stance and indicators that tapering of the bond-buying program could happen sooner than expected. Moreover, Apple’s growth rate is also projected to cool to single-digit levels in FY’22 after rising over 33% in FY’21. With Apple’s forward earnings multiple of about 28x coming in ahead of the historical average, we think the stock could see limited upside from current levels. See our analysis on Apple Valuation: Is AAPL Stock Expensive Or Cheap? for an overview of what’s driving our price estimate for Apple.
[11/4/2021] Apple Stock Holds Up Despite Supply Issues. Is It A Buy?
Apple (NASDAQ:AAPL) is beginning to see the impact of…