Is It Time To Buy Apple Stock Now That It Has Retreated?
The best response to the question of whether it is time to purchase Apple (NASDAQ: AAPL) is possibly. Perhaps now is a good moment to purchase stock in the largest manufacturer of consumer goods in the world, perhaps now is a good time to invest in this company's strong cash position and secure dividend, but perhaps now is also a good time to remain passive.
From its split-adjusted all-time high, the stock is down more than 30%, and the charts don't look great. The fact that this market is trading below a crucial technical support level, along with declining indicators and waning analyst sentiment, suggests that it may continue to decline. In that case, Apple's stock may drop below $120 and possibly even below $100 before bottoming out.
Apple is being pressured by the analysts.
Apple is being followed by 32 analysts, which increases the significance of their actions. With 32 members, this community represents tens of billions of dollars in investments, and their morale is deteriorating. The stock is a buy, but the question is when to buy, and right now does not seem to be the time. The Marketbeat.com consensus rating is still a Moderate Buy, and the price target, even at the low end, implies some upside for the stock.
Analyst sentiment is clearly trending in a negative direction. Investors should anticipate that price action will stay under pressure in the near term because it has a lower rating in comparisons to the past 12, 3, and 1 months, as well as a lower consensus price target. Once the experts start warming up again, which might not happen until later in the year, the pressure won't go away.
Why are the analysts downgrading their predictions and targets? due to the effects of the economic crisis on Apple's demand. Foxconn's production has increased to 90% (and likely higher by this point) as a result of China's reopening, but there are at least two dark clouds looming over the stock that could bring on rain later this year.
Estimates of iPhone 14 shipments come first. The downward trend in the consensus for this number will also have a significant influence on top-line forecasts. The second is information that the corporation has reduced its orders for AirPods, Apple Watches, and MacBooks. These products are not the company's top sellers, but they show signs of falling demand across the board, along with the iPhone outlook.
The outlook for Apple's upcoming earnings report at the end of the month is not promising. The market could easily be let down by real data since analysts are projecting revenue of close to $123 billion, which is down somewhat year over year.
The GAAP $1.99 is down 5% YOY, which makes the EPS prognosis much worse. The warning is that although Apple frequently exceeds expectations, don't anticipate a slight outperformance to ignite a surge. The market will be driven by the company's guidance for the rest of the year, and as things stand, both this stock's prognosis and the overall economy's are getting worse.
Institutional Support Is Insufficient For Apple
It's possible that Apple's institutional activity won't sustain the stock price either. Institutional holdings of the company are only about 57%, and they are neither strongly bullish nor strongly bearish. Investors should at most anticipate that the rotation will continue in this name as existing investors withdraw their funds and new investors invest them.
Looking at the chart, we can see that Apple's price action is recovering from the most recent bottom, though not as strongly as a bull would like to see. The last powerful, red candle's midpoint, as well as resistance at the $130 level, are still below the price action.
This stock will likely move lower before moving higher, if the market acts on the indications it is sending, and the bottom may not yet be in sight. Skyworks, Broadcom, and other stocks that depend on Apple for revenue are also negatively impacted by this.