Apple Stock: Fundamentals Don’t Support Valuations, Analyst Says

Apple stock price soared sharply this year amid the broader market tech rally and investors optimism over 5G supported devices. Its first-quarter results and revenue diversification strategies added to investors’ confidence.

The world’s largest tech company has reported billions of dollars in revenue from services and wearable in the first quarter this year.

Apple stock rallied almost 26% so far this year, extending the twelve-month gains above 75%. The shares are currently trading around $380 after hitting an all-time high of $399.

Analysts have a mixed opinion over Apple’s stock price fundamentals. Some are seeing further upside in the second half of the year while others are expecting a bumpy ride ahead.

Kvaal has provided a price target of $315 for Apple stock with an Underperform rating. This represents almost a 15% downside from the current level. Kvaal analyst Wolfe claims that Apple’s fundamentals are not supporting further stock price upside.

“We do not expect a 5G supercycle, argue against an independent services valuation, and do not consider Apple a stronger company on the other side of the pandemic,” writes Wolfe Research analyst Jeff Kvaal.

Apple is scheduled to report second-quarter earnings this month. Market analysts anticipate a significant drop in financial numbers when compared to previous quarters. The company has also delayed the launch of a 5G supported phone due to the pandemic.

Goldman Sachs has also suggested investors avoid Apple stock as the firm predicts that Apple stock price rally is unsustainable.

The firm claims that its CY21 earnings per share would stand below 16% compared to the consensus due to slowing unit sales, ASPs, and unit growth.

Goldman provided a price target of $299, which represents a significant downside from the current level. Apple shares plunged almost 4% last week due to bearish commentary from market analysts and rating agencies.