Apple (APPL) shares kept rising and on August 24, the stock gained for the fifth straight trading session after Morgan Stanley analyst Katy Huberty expressed an increasingly bullish view on Apple’s prospects.
Apple Inc (NASDAQ: APPL) shares keep rising. On August 24, the stock gained for the fifth straight trading session after Morgan Stanley analyst Katy Huberty predicted an increasingly bullish view of Apple’s prospects. The Morgan Stanley analyst raised the price target for AAPL stock to $520 from $431 in a note to clients. This new target is the highest among all the predictions listed on FactSet.
The price-target hike comes amid a major rally for Apple shares. Increased pushback from developers over Apple’s App Store practices has not affected its prices. The company gained 1.2% in volatile trading after last week’s strong rally that pushed its valuation above $2 trillion.
These gains also came ahead of Apple’s 4-for-1 stock split that takes effect on August 31. Although the stock splits do not mean anything for an investment on the surface, they theoretically make high-priced shares more accessible for individual investors. The stock hit a new intraday high of $515.14 on August 24, bringing its 2020 gains to over 70%.
Disgruntled Developers
The developer of ‘Fortnite’ Epic Games is suing Apple over alleged “monopolistic” policies on the platform. According to Epic Games, these policies prevent developers from acquiring payments using their preferred mechanisms within apps downloaded via Apple’s App Store. Currently, Apple collects up to 30% of the purchases made using its payment technology available on the App Store.
Huberty does not expect “any near-term changes to the App Store model” since legal battles take years. Additionally, “Fortnite’s” in-app purchase revenue is too low to affect Apple’s overall top line. She also added that the risk to Apple’s operations from the Trump Administrations’ interest in banning Tencent Holdings Ltd’s WeChat and U.S. residents is overblown.
U.S.-China Tension May Affect Apple Operations and Shares
Investors seem worried that the ban may extend beyond the U.S. and restrict Apple from dealing with WeChat in China. If that happens, it could prompt Chinese iPhone users to opt for other devices. But, Huberty doubts that Apple will be prevented from offering WeChat access to the Chinese residents in China.
Daniel Ives, a Wedbush analyst, took a similar view writing in his report:
“While the WeChat ban is within the US (App Store), importantly for Apple we believe Chinese consumers should see no disruption with this app which is key especially heading into the company’s long-awaited 5G iPhone 12 supercycle ready to launch in early October.”
Ives has set the target price for Apple’s stock at $515. He believes that there is some significant strength from the China region in the past several months. That is a dynamic that most analysts expect to continue into the next six to nine months.
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