Apple Still Fairly Valued, say Analysts

Apple's second-quarter sales were $58 billion, down 5% year on year primarily due to iPhone weakness, but there are signs of improvement in China

Abhinav Davuluri 1 May, 2019 | 11:33AM
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Apple campus, Silicon Valley

Apple (AAPL) reported fiscal second-quarter results at the high-end of its guidance, owing to continued growth in services as well as stabilisation in its iPhone business. CEO Tim Cook highlighted improvement in Greater China, thanks to recent pricing actions, trade-in and financing programmes, stimulus efforts by the Chinese government, and improved trade dialogue between the United States and China. Additionally, Cook noted iPhone declines were considerably smaller during the final weeks of the March quarter, which is a reassuring trend.

Meanwhile, the services segment delivered another impressive quarter, with App Store, Apple Music, cloud services, and App Store search ad businesses all recording all-time levels. Combined with a growing active installed base, our narrow moat rating stemming from switching costs remains comfortably intact, particularly as Apple customer satisfaction and loyalty continues to be healthy. We are maintaining our $200 fair value estimate and we think shares are fairly valued at current levels. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Apple Inc149.32 USD0.46Rating

About Author

Abhinav Davuluri  is a Senior Equity Analyst for Morningstar