Apple (AAPL) remained buoyant after its big day Tuesday, but whether that strength in AAPL stock can persist remains to be seen.
AAPL stock usually sells off after the company launches a new iPhone, but AAPL was doing just fine Wednesday following the debut of the iPhone 6 and Apple Watch.
You can thank the almost unanimous blessings of Wall Street analysts for at least part of the AAPL stock resilience. Plenty of analysts applauded the latest products and services from Apple.
However, as glowing as many of the early research reports have been on the iPhone 6 launch, serious questions remain about whether the company can turn the latest gadgets and services into home runs.
After all, there was nothing really unexpected in the Apple show. AAPL stock already reflected much of what the market learned on Tuesday.
Now comes the hard part.
The iPhone 6, Apple Watch and Apple Pay service have to at least fulfill their expectations to justify the move in AAPL stock ahead of their launch — and to drive more upside ahead.
Many Wall Street analysts seem comfortable with the potential upside in AAPL stock, even if at least one of them raises some troubling issues. Indeed, on Wednesday, at least 16 analysts surveyed by FactSet raised their price targets on AAPL. Among research shops, prominent target-price hikes came from Cantor Fitzgerald, Susquehanna, BMO Capital Markets, Piper Jaffray and Goldman Sachs.
Some of them even offered gushing praise, calling Apple’s show the “most memorable iPhone event” since the first one in 2007.
Not Everyone Rates AAPL Stock a Buy
However, not every analyst was convinced about the potential of the new Apple goodies.
Pacific Crest downgraded AAPL stock to “perform” (hold, essentially) from “outperform” (buy). The Apple Watch in particular is seen as more of a niche — rather than mass market — product. From Pacific Crest:
“Unless Apple Watch proves to be a surprisingly large mass-market hit, we believe multiple contraction will offset earnings growth over the next year and prevent significant stock appreciation.”
Other analysts who were unimpressed included Saxo Bank, which said AAPL stock was no more than a hold.
Interestingly, even with all the hikes to target prices, the median price target on AAPL suggests outperformance, but hardly blowout returns. The new median price target for AAPL stock stands at $110 in the next 12 months (up from $107 before the Apple event). Even after adding in the dividend, the upside implied in that price target is 14%.
That’s some nice upside, but it’s small beer compared to the price appreciation investors in AAPL are accustomed to. Heck, AAPL stock is up 22% for the year-to-date already.
Analysts are famously too cautious on the way up, too, so take their price targets with that in mind.
Ultimately, though, it doesn’t matter what Wall Street says. If iPhone 6 is a bigger-than-expected hit, AAPL will gain more — perhaps a lot more — than 14% over the next year.
But if it suffers from a rare dud, look out below.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
