Apple Stock Price Forecast August 2021 – Time to Buy AAPL?

Apple (AAPL) stock rose over 3% yesterday and hit its new all-time high of $153.49. The stock is now up 18% for the year. While it is still underperforming the S&P 500, it has managed to trim the underperformance to a great extent.

Apple is the largest company globally having a market cap in excess of $2.5 trillion. What’s the forecast for AAPL stock in September and would it continue the recent uptrend?

Apple stock price: recent developments

Yesterday, Apple announced the acquisition of classical music streaming company Primephonic. “With the addition of Primephonic, Apple Music subscribers will get a significantly improved classical music experience beginning with Primephonic playlists and exclusive audio content,” the company said in its release.

Here it’s worth noting that Spotify has accused Apple Music of antitrust and regulators in Europe are investigating the complaints. Apple has been trying to expand its business and is also reportedly planning to get into the BNPL (buy-now-pay-later) market.

The company has also managed to change markets’ perception of it being a hardware company. The rising share of Services revenues has helped Apple stock attract software like valuations.

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Apple is also rumored to bring satellite connectivity to its upcoming iPhone that’s expected to be launched this fall. The rumors triggered a buying spree in Globalstar stock which TFI Securities analyst Ming-Chi Kuo believes could be Apple’s partner for satellite connectivity. Notably, Apple launches the new iPhone model towards September which is the last month of its fiscal year. The new launch help propel year-end sales. Apple iPhones have a big fan following and last year even Berkshire Hathaway chairman shifted from his flip phone to an iPhone.

Berkshire Hathaway is the second-largest shareholder of Apple. The company is the largest holding for the conglomerate and Buffett regrets selling even the little amount of holdings that he has done over the last couple of years.

Technical analysis

Apple stock has crossed above all the moving averages after hitting a new all-time high. The stock has a 14-day RSI (relative strength index) of 65.7 which indicates that it is approaching the overbought territory. RSI values above 70 signal overbought positions while values below 30 signal oversold positions.

Apple stock price forecast

Wall Street analysts are generally bullish on Apple stock. It has received a buy or equivalent rating from 32 of the 43 analysts polled by CNN Business. Eight analysts rate it as a hold while the remaining three rate the stock as a sell. Its median target price of $168 is a premium of almost 10% over current prices. The street high target price of $190 implies an upside potential of over 24% from these levels.

Earlier this month, JP Morgan analyst Samik Chatterjee raised Apple’s target price by $5 to $180 and forecast higher sales for iPhones. “We are increasing our CY22 iPhone volume estimates further (to 246 mn units), and see substantial upside still relative to consensus expectation, which admittedly has been increasing over the past few months following stronger iPhone 12 volumes,” said Chatterjee in his note.

Apple is among the companies that are benefiting from digital transformation. The sales of iPhones are expected to rise significantly looking at the increased pace of digitization. The increasing adoption of 5G globally would also fuel a smartphone supercycle.

Risks for Apple investors

The increasing global scrutiny of Big Tech companies is a potent risk for Apple investors. In a major development, South Korea has ruled that app store companies can’t force developers to use their payment systems. In its previous remarks on the issue, Apple had said that “We believe user trust in App Store purchases will decrease as a result of this proposal – leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple.”

Another risk for Apple is the growing US-China rivalry. The communist country is not only a major supplier but has also turned into a major market, thanks to the growing prosperity in the world’s most populous country. Incidentally, the stock had fallen over 30% in the fourth quarter of 2018 when there was a massive escalation in the US-China trade war.

Apple stock price valuation

Apple currently trades at an NTM (next-12 months) PE multiple of 27.8x. While the multiples are below the 29.2x that the stock has averaged over the last year, it is higher than the five-year average of 19.3x. That said, the stock has seen a valuation rerating over the last year. Markets now value it more as a software and tech company and not merely as a gadget maker.

Overall, Apple is among the stocks that can be a part of your core portfolio. Over the long term, investors would also benefit from the company’s rumored foray into electric cars. The total addressable market for mobility is way ahead of the current market potential for the company If the company can make its mark in electric vehicles and autonomous driving, it can be a significant long-term value driver.

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