Apple Inc (AAPL) stock has enjoyed a remarkable run this year: AAPL has roared more than 45% higher in 2014, almost quadrupling the S&P 500‘s 12% gains. You wouldn’t normally expect a $680 billion company to still be thought of as a growth stock, but then again there’s nothing “normal” about Apple.
At least that’s what analysts seem to think, citing the Apple iPhone 6 and iPhone 6 Plus as major catalysts that could propel AAPL’s record-high stock price even higher.
Apple iPhone 6: The Gift That Keeps on Giving?
Apple already makes more money in a quarter than some small countries make in a year, but that’s not stopping Wall Street analysts from bumping up their price targets on AAPL stock. If not for the 7:1 Apple stock split back in June, shares would be trading above $800 a pop today.
And yet research firms are calling for AAPL stock to trend ever higher, with analysts at UBS, RBC Capital Markets, BTIG Research, and Susquehanna all raising their price targets in November to somewhere in the range of $120 per share to $135 per share.
Last year, Apple sold a whopping 51 million iPhones across the globe — in the fourth quarter alone. This year, people camped outside a New York City Apple store before the iPhone 6 was even announced in anticipation of the device. Preorders reached the 1 million unit level in China a mere six hours after going on sale, and in the first weekend it was available, more than 10 million of the newest iPhones were sold.
And while I personally believe that the glory days for Apple stock are over due to an increasingly apparent apathy for product quality and software, plenty of people disagree with me.
Take Susquehanna for instance, which expects Apple to produce between 60 and 65 million iPhones in the fourth quarter. The research firm thinks the handset-maker is trying to produce as many new iPhones as it possibly can, and anticipates great sales of the high-margin iPhone 6 Plus as a boon to Apple’s bottom line.
Susquehanna went on to raise its price target on AAPL stock to $135 per share today, a move that helped send Apple shares to all-time highs.
I have no doubt that the Apple iPhone 6 will sell like hotcakes over the holidays, but is that a signal the stock is a long-term buy? An eerie lack of innovation at the company since the passing of Steve Jobs in 2011 makes me fear that Apple relies on its brand strength at the expense of long-term growth strategies.
Apple’s mobile operating system certainly isn’t gaining ground against others, and has fallen in each consecutive year from 2011 to 2014 as Google Inc‘s (GOOG, GOOGL) Android has gone from 36% of the market to 85% of the market.
The fourth quarter should be kind to AAPL investors, but the coming years might not be as forgiving.
As of this writing John Divine is long AAPL stock, GOOG stock, and GOOGL stock. You can follow him on Twitter at @divinebizkid.