Apple stock is getting hammered by the outbreak of the coronavirus but has an opportunity for a big comeback.
Shares of Apple Inc. (Nasdaq: AAPL) dropped nearly 20% through last Friday as the spread of the virus sparked investor fears in the tech giant’s supply chain.
It also didn’t help that the company pulled its quarterly guidance for sales due to the outbreak.
Apple said its iPhone supply is dropping and demand for its products in China is following suit.
Because its supply chain relies so heavily on Asian countries, its shares continue to tumble as the coronavirus takes hold.
Demand Drop Temporary
One Wall Street analyst contends Apple’s reported fall in demand is not likely to be a permanent one.
Wedbush analyst Dan Ives maintained his $400 price target on the company and echoed one thing that will bring the its share price back.
“While the last few weeks has been an exogenous ‘shock event’ to Apple’s ecosystem on both the supply and demand side due to its China exposure,” he wrote in a research note, “we believe this will be short-lived as the longer-term 5G supercycle thesis and services re-rating remain the crux of our bull thesis on Apple for the next 12 to 18 months.”
We previously mentioned the same thing a few weeks ago.
Ives says that nearly 350 million of Apple’s existing customers will be “in a window of an upgrade opportunity” once 5G reaches the masses.
He added the company could sell between 200 million to 215 million new iPhones in the September 2021 fiscal year, and could even break its record of 231 million phones sold in FY 2015.
But That’s Not All For Apple
Another big potential for the company is new product launches.
TF Securities analyst Ming-Chi Kuo said research and development of new mini-LED displays won’t be negatively impacted by the coronavirus.
This suggests new iPad and MacBook products could be on schedule for a launch later this year.
“We predict that Apple is currently developing six mini-LED-support products,” Kuo wrote in the note dated March 4. “Including a 12.9-inch iPad Pro, a 27-inch iMac Pro in 4Q20, a 14.1-inch MacBook Pro (upgraded from 13.3- inch), a 16-inch MacBook Pro, a 10.2-inch iPad, and a 7.9-inch iPad mini in 2020.”
What it All Means
If it can get back to its normal production levels, and if the company can roll out new products on time, it would mean the recent drop for Apple is only temporary.
For investors, that presents a wait-and-hold approach to Apple shares.
It’s a lot of “ifs” but pulling it off could mean another year of solid growth for Apple.