Investing in Apple: Examining iPhone 16 Lead Times
When it comes to investing in technology giant Apple, one major factor to consider is the lead times for the latest iPhone model. According to analysts at Morgan Stanley, concerns about iPhone 16 lead times could potentially impact Apple’s stock performance in the near term.
While lead times for the iPhone 16 have doubled since last Friday, they are still shorter compared to the previous year. This could potentially lead to negative iPhone build revisions and subsequent stock underperformance, according to analyst Erik Woodring. In fact, in the past five December quarters where lower build revisions occurred, earnings per share revisions for the December quarter were lowered by an average of 1.7%. This ultimately resulted in the stock underperforming by an average of five points in the three months following an iPhone launch.
Woodring emphasizes the importance of monitoring the trajectory of iPhone 16 lead times in the coming days. Historically, iPhone lead times tend to elongate leading up to the first in-store availability date before gradually decreasing in the weeks that follow. A sustained elongation of lead times would be viewed positively, while a sudden reversal after Friday’s availability date could signal a greater risk of negative iPhone build revisions.
Despite potential near-term downside, Woodring believes that investors should consider buying Apple stock on any possible cuts to estimates. He sees artificial intelligence-driven multiyear upgrades as inevitable and a driver of long-term growth. With a price target of $273, implying a 26% upside, and an overweight rating on the stock, Woodring remains bullish on Apple’s future prospects.
Furthermore, Wall Street analysts largely share this optimism, with 36 out of 48 analysts covering the stock giving it a strong buy or buy rating. The average target price is $240.58, indicating an 11% upside potential. Additionally, Apple currently has a forward price-to-earnings ratio of about 32.7, according to FactSet data.
At Extreme Investor Network, we believe that staying informed about factors such as iPhone lead times can provide valuable insights for investors looking to capitalize on Apple’s growth potential. By understanding the impact of these trends on stock performance, investors can make more informed decisions when it comes to their investment strategies. Stay tuned for more expert insights and analysis on the latest investment trends and opportunities.