Apple Stock Price Forecast March 2022 – Time to Buy AAPL Stock?

Apple (AAPL) stock is down 8.2% in 2022 and is the second-best performing FAANG stock of the year. The iPhone maker was the second-best performing FAANG in 2021 as well where it only trailed Alphabet, just as in 2022.

Prior to that, AAPL was the best performing FAANG stock for two consecutive years. What’s the forecast for Apple stock and can it again reclaim the $3 trillion market cap that it achieved on the first trading day of the year?

Apple stock recent developments

Apple held its first product event of the year earlier this week and announced several new products. The key feature was the long-awaited budget iPhone SE. The model is the successor to the 2020 model. However, it features 5G connectivity along with the A15 processor. The model would be available in stores from 18 March and would have a price of $429, which is higher than the $399 for the previous model.

The company also announced an upgrade for its iPad Air, the first since 2020. The model would now feature the M1 processor which is used in the pricier iPad models. The model would also 12-megapixel front camera and would cost $599.

Notably, in the fiscal first quarter of 2022, all of Apple products barring the iPad reported record revenues. The business was hit by the global chip shortage but the company said that the chip supply should incrementally improve in the next few quarters.

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AAPL earnings were better than expected

Apple reported revenues of $123.9 billion in the fiscal first quarter, which were 11% higher than the corresponding quarter in the previous year. The revenues were a new record and Apple reported record revenues in all geographies. Notably, iPhone revenues increased 9% to $71.63 billion in the quarter. While many analysts were apprehensive of the iPhone 13’s sales outlook, the sales were better than expected in the quarter. The company has now added two new colors to the iPhone 13.

In the earnings call, Apple said that its installed device base surpassed has 1.8 billion in the quarter. Also, it had 785 million paid subscriptions in the quarter, which is another record. These subscribers are expected to drive the APPL’s growth in the long term. Apple also has a cash pile of $80 billion which it is expected to use for buybacks.

Apple Mac Pro

Apple also teased a Mac Pro at this week’s event but more details about the product would be out later. The company is also expected to launch AR/VR headsets with some analysts expecting a launch as soon as this year.

Analysts see the budget phone as a key driver

Wall Street analysts are bullish on the budget iPhone and believe that it would help the company grab more market share. “As we highlighted in our prior note, Apple has done a great job in gaining share in the higher smartphone price bands, and we think this refresh of the SE could help the company gain share in the lower bands,” said Bank of America analyst Wamsi Mohan.

Morgan Stanley expects Apple to ship 22.6 million iPhone SE this year, which is around 10% of the 237 million total iPhone shipments that the brokerage is forecasting for the year. “While there are slight timing differences when comparing the two cycles – the iPhone SE2 was launched in April vs. the iPhone SE3 in March – we believe these observations point to upside risk vs. our March and June quarter iPhone shipment forecast,” said Morgan Stanley analyst Katy Huberty.

Meanwhile, not everybody is convinced that the budget iPhone would be a key driver for Apple. According to Bernstein, “We continue to believe that iPhone’s fortunes through year end will be most shaped by sustainability of demand for Pro models rather than the success of the SE.”

Apple stock forecast

Wall Street analysts are bullish on Apple stock. Of the 44 analysts covering the stock, 34 have rated it as a buy while nine have a hold rating. One analyst has a sell rating on the stock. AAPL has a median target price of $192 which is an 18.6% premium over current prices. Its street high target price of $215 is a premium of 32.8% while the street low target price of $154 is a 5% discount over current prices.

Apple stock long-term forecast

Apple’s long-term forecast would depend on how its electric vehicle plans play out. The mobility industry has a much bigger TAM (total addressable market) than what AAPL is currently targeting. If the company can come up with an attractive value proposition like the iPhone, it can target Tesla’s dominance of the EV industry. But then, taking on the persona of Musk and the strong value proposition from Tesla won’t be an easy task.

Also, the company sees financial services as a key long-term driver. Apple has been gradually expanding its financial services offering and is also expected to get into buy-now-pay-later.

What risks that AAPL faces?

For Apple, higher exposure to China, for both production as well as sales, is a key risk. The company suspended operations in Russia after its invasion of Ukraine. If China also does any such misadventure in the future, AAPL would be under pressure to react to that. In the past also, Apple faced boycott calls in China amid the US-China trade war. However, the company’s CEO Tim Cook said that the impact was not much.

That said, Apple is not the only US company carrying that risk and multiple other companies with business in China face such issues.

Should you buy Apple stock?

Apple’s valuation multiples have also come down amid the crash and it now trades at an NTM (next-12 months) PE multiple of 26.1x. The stock might remain volatile for some time given the geopolitical environment. However, it should eventually recover as investors seek solace in quality tech companies.

AAPL is the largest holding for Berkshire Hathaway and the legendary Warren Buffett even regrets selling the little number of shares. Apple is a play on innovation and multiple growth themes. AAPL stock looks a good buy at these prices and should continue to be a long-term wealth creator.

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