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Consider Investing in This NASDAQ-Listed Technology Major – AAPL

May 18, 2022 | Team Kalkine
Consider Investing in This NASDAQ-Listed Technology Major – AAPL


Apple Inc.

AAPL Details

Apple Inc. (NASDAQ: AAPL) develops, manufactures, and markets smartphones, tablets, wearables, accessories, and a variety of linked devices. The company's key products include the iPhone, Mac, iPad, Wearables, and home accessories. Apple Inc. is the biggest company globally as per the market capitalization.

Latest News:

  • Aiding and Assisting Deaf: On May 17, 2022, Apple unveiled new software features that make it easier for people with disabilities to navigate, interact, and get the most out of their Apple products. These significant enhancements combine Apple's latest technologies to provide users with unique and customizable tools, and they continue the company's long-standing dedication to producing products that work for everyone. With advances in hardware, software, and machine learning, people who are blind or have low vision can use their iPhone® and iPad® to navigate the final few feet to their destination with Door Detection; users with physical and motor disabilities who rely on assistive features like Voice Control and Switch Control can fully control Apple Watch® from their iPhone with Apple Watch Mirroring. Apple also adds over 20 more languages and locales to its industry-leading screen reader VoiceOver. These improvements will be available later this year as part of Apple platform software releases.
  • Quarterly Dividend: AAPL's board of directors had declared a cash dividend of USD 0.23 per share of the company's common stock, up 5%, payable on May 12, 2022, to shareholders of record as of the close of business on May 9, 2022.

Q2Y22 Results:

  • Growth in Topline: The company reported a growth of 8.59% in revenues to USD 97.28 billion in Q2FY22 (ended March 26, 2021) compared to USD 89.58 million in Q2FY21, driven by 6.57% and 17.28% growth in Products and Services segments, respectively.
  • Increase in Net Income: However, AAPL witnessed an increase in net income to USD 25.01 million in Q2FY22 vs. USD 23.63 million in Q2FY21.
  • Cash and Debt Position: As of March 26, 2022, the company had a cash balance (including short-term investments) of USD 51.51 billion with total outstanding debt of USD 119.89 billion.

Key Risk:

  • Supplier Concentration Risk: Because specific components are currently obtained from a single or limited source, the AAPL faces substantial supply and cost risks. Many components, particularly those obtained from multiple sources, are occasionally vulnerable to industry-wide shortages and significant commodity price changes, which can have a materially adverse impact on the Company's business, results of operations, and financial condition.

 Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

AAPL' stock price has fallen 18.38% in the past three months and is currently trading close to the lower end of its 52-week range of USD 122.86 to USD 182.94. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 178.56.

Considering the correction in the stock price, strong market presence, high margins, robust dividend yield, current valuation, and associated risks. We recommend a "Buy" rating on the stock at the closing price of USD 140.82 as of May 18, 2022.

One-Year Technical Price Chart (as on May 18, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.