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Where next for Apple share price?

Shares of US technology company Apple Inc. are currently trading at a 39-year high of around US$265.

Source: Bloomberg

It’s another week of changing rhetoric and developments in the US-China trade war, and US-listed entities like Apple are finding themselves in the middle of it.

Technology company Apple Inc. saw share prices plunge as much 4.25% on Tuesday 03 December, just one day after President Donald Trump indicated the possibility of a prolonged trade war with China.

Based on IG trading data, Apple stocks were trading at an all-time high of US$268.40 per share as of 4pm on Monday 02 December. However, it dropped to US$256.99 per share by the close of Tuesday, following Mr Trump’s comments that he 'could wait until after the elections in 2020 for a US-China trade deal’.

Prices have since rebounded slightly, after White House officials clarified that a phase one deal with China is still in the works, and could still be completed before December 15, when the new round of tariffs are set to be effective.

Share price at all-time high

Price fluctuations aside, Apple shares are now treading along a historical peak, since its listing debut on the NASDAQ market dating all the way back to 12 December 1980.

Year-to-date, shares have surged by over 85%, thanks in large part to a renewed business focus on software and services, alongside improved US-China trade relations earlier in the year, said IG Asia Market Strategist Jingyi Pan.

In March this year, Apple revealed plans to reinvent itself as a digital services provider, following falling sales of the iPhone and other gadgets that were once the most profitable parts of the business.

CEO Tim Cook had said the company would focus instead on pushing the App Store, iCloud, Apple TV, and other solutions.

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The move is already impacting earnings. Total net sales for services for Q4 2019 are US$12.51 billion, up from US$10.60 billion the same period last year.

Furthermore, with hardware manufacturing costs still dependent on how US-China trade relations pan out, the strategic shift was viewed as a boon by many investors.

It’s also premature to count the iPhone completely out, according to another broker – US equity analyst Dan Ives. The stock gains, he said, are also due in part to expectations of stronger iPhone sales in 2020 and beyond.

Predictions for the coming months

In a note to clients shared with US financial news site MarketWatch, Ives wrote that ‘while shares are up (more than 65%) year to date, we believe the tech stalwart is still in the midst of a renaissance of iPhone growth heading into 2020, that will further catalyse the stock higher as it gets re-rated from the Street’.

He even revised stock price target in a recent FactSet poll from US$300 to US$325, indicating increased optimism with regards to Apple shares.

JP Morgan US analyst Samik Chatterjee also maintained his ‘buy’ position in the same poll, raising his price target from US$280 to US$290. He also stated that he expects prices to remain bullish because of the potential of the company’s advertising business via its Apple TV+, Apple Arcade, Apple Music, and Apple Pay offerings.

Analyst ratings from The Wall Street Journal also found overweight consensus for Apple shares, which implies that the stock is better value for money than others at present.

Twenty-two out of 43 traders also said in the poll to buy Apple shares, 13 to hold, and five to sell.

IG’s Pan says all eyes are still pointed toward December 15, when it will be known once and for all where the chips will fall in the trade negotiations.

Apple shares closed at US$264.99 on Thursday 05 December.

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