Wall Street analysts say investors should buy the Apple dip despite supply chain worries

Published Fri, Apr 29 20227:32 AM EDTUpdated Fri, Apr 29 202212:24 PM EDT

Apple shares were under pressure early Friday after the tech giant's chief financial officer, Luca Maestri, warned of supply challenges ahead that could hurt sales of iPhones and other devices. Still, most analysts on Wall Street remained bullish on the company after its earnings report showed robust consumer demand for Apple devices despite macro headwinds. At least nine analysts trotted out mostly positive commentary on Apple's outlook following the quarterly earnings, with Citi saying it would use "any stock weakness as a buying opportunity." Here's what analysts have to say. Evercore ISI sticks to outperform Any supply chain challenges ahead will likely build demand for the iPhone maker, according to Evercore ISI. Analyst Amit Daryanani is sticking with his outperform rating, saying in a Thursday note that comments from Apple suggest supply chain challenges are resolved. "Given AAPL's comments that much of the supply issues have been resolved, we expect some of these revenues to come back as they likely create more pent-up demand for AAPL," Daryanani said. Evercore ISI also maintained its $210 price target on Apple. JPMorgan keeps overweight rating, trims price target Apple continued to prove itself as a safe haven for investors in its most recent earnings report, according to JPMorgan. Analyst Samik Chatterjee maintained an overweight rating, saying Thursday that a robust product cycle and strong consumer demand could boost the company. "We continue to believe that there remains upside to consensus earnings and to the earnings multiple in the medium term as we see several positives from the print, including: 1) despite concerns about Apple's ability to drive iPhone revenue growth following the early 5G adoption cycle, the robust product cycle continues to deliver upside to expectations; and 2) resilience of demand despite a pull-back in consumer spending reinforces the resilience of the portfolio given its increasing relevance to consumers, particularly exiting the pandemic," Chatterjee wrote. JPMorgan trimmed its 12-month estimate and its Dec. 22 price target to $200 from $205. Bernstein maintains market-perform Apple will see "muted" earnings growth from here, according to Bernstein. Analyst Toni Sacconaghi stuck to his market-perform rating for Apple, saying in a Friday note that challenges ahead dampen the outlook on an otherwise fundamentally sound company. "We see risk-reward on AAPL as relatively balanced," the analyst wrote. "Apple was a notable pandemic beneficiary – with earnings growing 6x faster than recent historical rates – and we see more muted earnings growth over the next few several years" Bernstein kept to its price target of $170 per share. Apple remains Morgan Stanley's 2022 top pick Robust consumer demand for iPhones, computers and wearables make Apple's business "remarkably stable," according to Morgan Stanley. Analyst Katy Huberty maintained an overweight rating on the company, saying Friday that Apple remains the investment firm's top pick for 2022. In particular, analysts will watch for a reopening in China, which is "key" to unlocking revenue upside. "While we will continue to closely track the pace of China's reopening, as well as Apple product lead times, for signs of supply challenges easing, we believe the underlying health of Apple's product and services ecosystem remains remarkably stable, which is a clear differentiator in today's more challenging macro environment," Huberty wrote. Still, Morgan Stanley cut Apple's price target to $195 from $210. Bank of America reiterates buy A solid quarter despite several challenges ahead has Bank of America bullish on the company. Analyst Wamsi Mohan reiterated a buy rating on Apple, highlighting in a Friday note the strong global demand for iPhones, minus China, and the company's robust gross margins. "We remain bullish given (1) Phone demand remains strong globally (ex-lockdown impact in China), (2) Mix remains positive in iPhone, (3) Channel inventory levels remain at lower end of range across products, (4) Services headwinds persist another qtr but compares get easier post that, (5) gross margins are strong and structurally headed higher (faster services growth vs. prod if mix remains similar), (6) commitment to capital return/increased dividend, and (8) potential M & A to drive innovation and growth," Mohan wrote. Bank of America kept its price target of $215. Citi maintains buy rating Investors should buy this dip in Apple, Citi said Friday. Analyst Jim Suva reiterated a buy rating on Apple, saying the company's supply chain issues could be "good" given resilient demand for iPhones. "The very impressive results that exceeded consensus for both sales and EPS by +3%/+6% will be overshadowed by the company's supply chain commentary stating constraints of $4 billion to $8 billion for the June quarter," Suva wrote. "While this is not a positive, we do view this problem as a 'good' problem because demand is materially outpacing supply and Apple's installed base continues to grow." "For those who argue that demand is declining and want to be negative on the stock, we point to the long product lead times, no compelling competitive substitution product, and an Apple installed base that is growing that will lead to future services revenues, which are more profitable than product revenues," Suva continued. "We would use any stock weakness as a buying opportunity," the analyst added. Citi maintained its $200 target price. Wells Fargo maintains overweight Apple may trade down or sideways over the near term after its recent earnings report, but Wells Fargo is confident supply chain issues could be resolved. Analyst Aaron Rakers on Thursday reiterated an overweight rating on the company. "We believe Apple's demand remains strong (barring worsening Covid situation), and while supply continues to be challenged, we think the situation should improve now that nearly all plants have restarted production," Rakers wrote. "We think Apple is executing well within its constraints and our positive thesis remains intact." Wells Fargo maintained a $205 per share price target. Needham maintains buy The best way to think about Apple's valuation and competitive advantage is through Apple device owners, argued Needham. Analyst Laura Martin maintained a buy rating on Apple, saying Friday the firm's growing services ecosystem through its iPhones, iPads, AirPods and other wearables and products will continue to drive valuation upside. "Decisions that elongate time spent inside the AAPL ecosystem increase AAPL's revs and valuation, we believe," Martin wrote. Needham maintained a $170 price target on Apple. Barclays maintains equal-weight Growth could get tougher as challenges lie ahead for Apple, according to Barclays. Analyst Tim Long maintained an equal-weight rating on Apple, saying Thursday that "as compares get tougher, we expect growth to decelerate across most segments." "Apple has a sticky ecosystem, growing services and wearables business, and a large capital return program, providing downside support for long-term investors," Long wrote. "We rate Apple equal weight as questions persist about the deterioration of iPhone upgrade demand with rising competition in the premium smartphone segment." Barclays also trimmed Apple's price target to $167.00 from $170. —CNBC's Michael Bloom contributed to this report.

Customers walk past a digital display of the new green color Apple iPhone 13 pro inside the Apple Store on 5th Avenue in Manhattan, in New York, March 18, 2022.

Mike Segar | Reuters

Apple shares were under pressure early Friday after the tech giant's chief financial officer, Luca Maestri, warned of supply challenges ahead that could hurt sales of iPhones and other devices.

Still, most analysts on Wall Street remained bullish on the company after its earnings report showed robust consumer demand for Apple devices despite macro headwinds. At least nine analysts trotted out mostly positive commentary on Apple's outlook following the quarterly earnings, with Citi saying it would use "any stock weakness as a buying opportunity."

Here's what analysts have to say.