It’s official. Apple Inc. (NASDAQ: AAPL) has shaken off the coronavirus.
Closing at $331.50 on Friday, the Apple share price topped the all-time high it achieved in February, before the COVID-19 pandemic took its toll on the economy.
While a record-high price might cause some investors to consider taking their profits and running, analysts remain bullish on Apple. There’s even talk that the company, based in Cupertino, California, could be heading toward $2 trillion in market capitalization within the next four years.
Apple, Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT) appear to be the frontrunners in the race to $2 trillion.
Of the 43 Wall Street analysts who have issued ratings and price targets for Apple in the last 12 months, 28 rate the stock a Buy, 11 say Hold and only 4 recommend Sell.
On Friday, two analysts raised their price targets for Apple. Wedbush, which rates the stock Outperform (Buy), increased its price target to $375 from $350. Credit Suisse Group raised its price target to $295 from $260 and maintained its rating of Neutral (Hold).
The average 12-month price target is $303.49, with a high of $375 and a low of $155.
Friday’s rally gave Apple a good bump, with the price rising $9.18, or 2.85% over Thursday’s close. The previous record high of $326.32 was recorded on Feb. 12. Shares were trading around $328 mid-morning Monday.
The Mid-March Swoon
In mid-March, the share price swooned as the effects of the COVID-19 pandemic set in. After hitting multiple record highs in February, the stock price closed at $223.76 on March 23. That was a drop of about $100 from its high-flying days in February. Apple has rallied about 46% since its March low point and is up nearly 12% for the year.
The company is the leader in market capitalization, with $1.432 trillion. Microsoft is in second place with $1.415 trillion. Apple will be worth $1.5 trillion if its share price hits $346. It would need a price of $462 to reach $2 trillion in market cap.
“With roughly 350 million … iPhones in the pent up ‘window of an upgrade opportunity,’ we believe [Apple] has a unique opportunity to capture this delayed supercycle opportunity with a major 5G cycle on the horizon which will include a host of new smartphone versions/models for iPhone 12,” Wedbush analyst Daniel Ives wrote last week in a note to clients.
Ives anticipates that about 20% of iPhone upgrades will come from China this year. He said he doesn’t expect recent tensions between the United States and China to have much of an effect on supply and demand for the 5G iPhones, which are due out this fall.
Strong Performance From App Store
Credit Suisse analyst Matthew Cabral finds the App Store’s strong performance encouraging, although he kept his Neutral rating while raising his price target.
App Store revenue appears to be headed toward 35% growth for the quarter after seeing 39% growth in May.
“Despite a slow start, increased screen time amid widespread ‘stay at home’ measures is now translating into a rapid acceleration in App Store revenue,” Cabral wrote. “We’re encouraged by building App Store momentum, both as evidence of Apple’s ability to increasingly monetize its nearly 1 billion iPhone user base and in support of multiple expansion for the stock as the mix shifts to higher-quality, more recurring revenue.”
Morgan Stanley analyst Katy Huberty raised the bank’s price target for Apple last week to $340 from $326. She said COVID-19 stay-at-home orders had “been a tailwind to the app economy, as consumers have been forced to spend more time than usual inside their home, driving an acceleration in App Store download and net revenue growth.”
Long-Distance Group Selfies
Apple has new selfie technology that sounds like it could have been inspired by the work-from-home months, even though the company’s application for a patent was submitted in the third quarter of 2018.
Last week the U.S. Patent and Trademark Office granted Apple a patent for “synthetic group selfies,” Patently Apple reported. The patent covers a computing device that allows users to take photos or videos from a variety of people and combine them into a single group selfie.
Patently Apple notes that users will be able to take group selfies without requiring people to crowd around a single camera.
It remains to be seen whether that will add or subtract fun from the group-selfie process.
Looking Ahead to WWDC 2020
This year Apple will hold its first virtual Worldwide Developers Conference. The annual week-long meeting is where CEO Tim Cook and other executives showcase new developments, products and services.
The company is expected to release its beta version of iOS14 to developers, 9to5Mac says. It is expected to feature a home screen that “allows users to see all their application icons in a list view.”
Other Apple products that could potentially show up at the conference are an augmented reality app and a CarKey feature that allows users to unlock and start their cars with their iPhones or Apple Watches.
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