Apple stock has been a top performer this year. But you likely wouldn't guess that from looking at its fundamentals.
The consumer electronics giant has posted declining sales for the past two quarters and is on tap to report another drop with its June-quarter results this Thursday. It's also set to report its third-straight quarter of flat or declining earnings.
Investors likely will focus on commentary for the September quarter when sales and earnings are forecast to return to growth thanks to the release of the iPhone 15 series.
Analysts polled by FactSet expect Apple to earn $1.19 a share, down 1% year over year, on sales of $81.7 billion, down 2%, in the June quarter.
Apple Stock 'Boring,' 'Lacks Pizzazz'
"Apple is the most 'boring' buy-rated stock," Jefferies analyst Andrew Uerkwitz said in a recent note to clients. "It lacks a focus on 'efficiency' and buzzwords such as cloud or AI."
He added, "What Apple lacks in investor pizzazz, it makes up for with consistency. Its moat has been, remains, and will be its ability to integrate software services with its hardware that builds a regular replacement cycle, ability to slowly raise prices, and take share. This consistency is what makes it a buy-rated stock — especially in an uncertain economic environment."
Year to date through Friday's close, Apple stock is up 50.7%. It is trading just below its all-time high of 198.23, reached on July 19.
On the stock market today, Apple stock climbed 1.4% to close at 195.83.
IPhone And Services Are Business Drivers
The two most important drivers of Apple stock are the iPhone and services, Uerkwitz said. That might change early next year when the company launches its mixed-reality headset, Apple Vision Pro, he said.
Uerkwitz rates Apple stock as buy with a price target of 225.
However, D.A. Davidson analyst Tom Forte believes Apple stock has gotten ahead of itself. He rates Apple as neutral with a price target of 185.
Apple stock is trading at a premium to its three-year average multiples for earnings and sales, Forte said in his note to clients.
Barclays analyst Tim Long also is cautious about Apple's prospects. He rates Apple stock as equal weight, or neutral, with a price target of 149.
Apple Stock: Valuation Concerns
Long predicts that Apple will deliver June-quarter results that are in line with Wall Street's consensus estimates. Strong services revenue and stable iPhone sales should offset weaker sales of other hardware in the period, he said.
Meanwhile, Apple's September quarter could be negatively impacted by a tight supply of iPhone 15 handsets because of shortages of key components, he said. Those components include camera modules and large-screen displays, Long said.
Goldman Sachs analyst Michael Ng sees Apple getting a lift in the June quarter from better-than-expected sales of Mac computers and services.
He rates Apple stock as buy with a price target of 222.
"We recognize investor concerns around valuation and downside risks, but continue to believe that Apple's growing iPhone installed base serves as the foundation for growing monetization per user," Ng said in a note.
September-Quarter Guidance In Focus
Elsewhere, Morgan Stanley analyst Erik Woodring rates Apple stock as overweight and a "top pick" with a price target of 220.
"We expect Apple to post an in-line June quarter but guide September-quarter revenue and gross margin materially higher than current consensus estimates," Woodring said in a recent note. His September-quarter outlook reflects strength in iPhones, Mac computers and services.
Apple stock has an IBD Composite Rating of 90 out of 99, according to IBD Stock Checkup. That puts it in the top 10% of stocks for technical and fundamental performance over the past 12 months.
Further, Apple stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
