Apple stock is down 10% this year, but investors still have 5 reasons to stay bullish, says Wedbush

• Apple Inc. shares are down about 12% this year, according to Wedbush Inc. but could still see significant upside in 2024.

• The iPhone maker has 48% of upside, the firm said, outlining five bullish positives for the stock.

Wedbush believes that Apple's performance this year has been disappointing, but there are still reasons for investors to remain bullish on the iPhone maker.

The company noted that there is a "dark cloud" over the company, with Apple's stock sliding 10% year-to-date in 2024, a loss of more than $200 billion in market capitalization. The loss comes amid worries about demand in China, where Apple is battling the Chinese government's crackdown on the iPhone and fierce competition from Chinese rivals such as Huawei.

"It's clear that Apple is dealing with one of the more sleepy Chinese demand environments we've seen in the last five years, as a combination of factors has created a perfect storm for Cupertino in this key market," the analysts said in a report Tuesday, estimating that March iPhone sales in China could be "modestly" lower than expected.

But analysts say Apple stock still has the potential for significant upside this year, and they maintain an "outperform" rating on the stock and a $250 price target, which is Wall Street's highest expectation for Apple stock.

The rise in Apple's stock price to this level implies 48% of upside, which can be attributed to five bullish factors, Wedbush said:

1. Overall iPhone Sales Could Be Strong This YearThe analyst noted that while there are some conservative estimates for iPhone sales in 2025, the 2024 estimate is "achievable. Analysts have noted that while Koon has some conservative estimates for iPhone sales in 2025, the 2024 estimate is "achievable".

2. Considering the fact that many users are about to get promoted, the iPhone'sDemand may be suppressedWedbush estimates that about 270 million iPhones could be swapped out for the newer version, especially since Apple is launching the iPhone 16 this year.

3. Analysts at Wedbush sayThe Company's service revenues remain "rock solid."The latest financial report shows that Apple's service revenue hit an all-time high in the first quarter. The latest financial report shows that Apple's first-quarter revenue from its services business hit an all-time high.

4. The company is in the process of incorporating artificial intelligence into its devices. Wedbush predicts that Apple will announce its progress in generative AI at the Worldwide Developers Conference in June.

5. Apple still dominates smartphone marketThe company has a global installed base of 2.2 billion devices. Analysts say this is "the most powerful installed base of any company".

In the medium term, investors are focusing on Apple's next quarterly earnings report, which is due out on May 2nd.

"As the market braces for a brutal March earnings report and weak June industry guidance, we think this could be the last few quarters of this growth storm as Apple will see a resurgence in growth starting with the September earnings report and FY25," Wedbush said." While some patience will be needed to deal with the weakness in China, we believe the seeds of Apple's growth turnaround are being sown in the fields."

Data from the Nasdaq Resonance Exchange shows that most analysts on Wall Street have maintained a "strong buy" rating on Apple stock. Apple's average price target is $202 per share, meaning the stock has 20% of upside.

Read the original article on Business Insider