Apple (NASDAQ:AAPL) stock is within spitting distance of its all-time high. Given the stock’s recent momentum and strong analyst ratings, it’s entirely possible that a share price of more than $200 could be in the cards in short order.
But is this stock one worth buying for its momentum, or will its relatively high valuation keep this stock’s performance muted in the coming years? Let’s dive into why I think it’s fine to buy AAPL stock into this momentum, and just hold it for the long-term.
Analysts Are Optimistic with AAPL Stock
Apple’s shares had an impressive 45% surge in 2023, prompting analysts to foresee further growth. Tigress Financial’s Ivan Feinseth, a notable analyst, raised the price target from $225 to $240, signaling a 26% potential gain.
Feinseth’s optimism about Apple is underpinned by a forecast of re-accelerated top-line growth in 2025. Despite a slight dip in Q4 revenue, the strong performance of Apple’s high-margin services, reaching an all-time quarterly record of $22.4 billion, supports this positive outlook.
Additionally, JPMorgan’s Samik Chatterjee maintained an overweight rating on Apple with a $225 price target, noting balanced iPhone supply and demand. Evercore ISI’s Amit Daryanani, with a $210 price target, dismissed concerns about Chinese competition, emphasizing Apple’s premium market positioning against lower-end offerings from Huawei and Xiaomi.
Excellent iPhone Business
An underappreciated positive aspect is the robust performance of Apple’s iPhone business. The pivotal segment rebounded in fiscal Q4, witnessing a 3% year-over-year revenue increase. Apple foresees continued growth in iPhone revenue in fiscal Q1, contributing positively to its ecosystem and services.
Various elements in Apple’s business, including upcoming products like Apple Vision, may contribute to growth. Although Apple’s current P/E ratio is high at 31, its premium is justified.
The $240 per share target assumes nearly flawless execution, and if Apple doesn’t achieve substantial revenue growth by next summer, investor sentiment may shift.
Despite these considerations, Apple shares appear compelling for long-term investment based on current information.
Apple Stands Tall with Its Financials
On November 2, Apple exceeded Q4 fiscal expectations but projected flat sales for the upcoming period. Apple stock dipped 0.5% the following trading day. The quarter saw earnings of $1.46 per share on $89.5 billion in sales, beating FactSet estimates.
Apple’s year-over-year earnings increased by 13%, despite a 1% sales decline. This marked Apple’s fourth consecutive quarter of decreasing sales, but earnings have shown growth for the past two quarters.
In the September quarter, Apple’s iPhone revenue grew 3% to $43.8 billion, constituting 49% of total sales in fiscal Q4. Mac computer sales dropped 34% to $7.6 billion, and iPad sales declined 10% to $6.4 billion.
Apple projected sales similar to the previous year for the December quarter, but analysts believe Apple’s caution may be excessive. FactSet’s polled analysts anticipate a 1% increase in fiscal Q1 sales to $118.8 billion, with earnings rising 11% to $2.09 per share. Apple’s next earnings report, due in late January, could affect Apple stock.
On the date of publication, Chris MacDonald has a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.