Apple Inc. (NASDAQ:AAPL)’s size will keep it from registering an explosive growth, as per Robert Cihra – managing director and research analyst at Guggenheim Partners. The analyst stated that stocks might be surging, but it does not mean that Apple will see double-digit growth.
“Its size keeps it from being a source of explosive growth,” Chira said, adding “But I think Apple can keep growing low single-digits.”
On Wednesday, the Dow Jones Industrial average crossed 20,000 mark for the first time, with major indexes making new highs. Dow Index closed above 10,000 in 2009, and on Wednesday, it reached 20,000 mark. During that time, Apple has been one of the top performers posting gains of over 330%.
During this period, annual revenue for the firm surged about $216bn, a rise from just under $43bn in 2009, notes CNBC. Cihra feels that Apple Inc. (NASDAQ:AAPL) is comparatively new in the DJIA, but it is significant to the Dow’s future.
Apple caught in law of large numbers
Michael Olson – senior equity research analyst at Piper Jaffray – stated that the law of large numbers has caught up to Apple to some degree.
And, with Trump giving importance to manufacturing in the US, the iPhone maker could reel under pressure. Trump has already instructed trade officials to withdraw from the major international trade agreements.
“Despite the services revenue — which is a great, high-margin business, growing nicely — we don’t have margins expanding. Because we do think there could be increased expenses related to local manufacturing in the U.S,” said Olson. The analyst believes there are areas where Apple can grow including India.
Apple is seeing significant growth in its iTunes and the App Store with revenues up 24% in the Q4 year over year. Its stock is up 20% over the past year. The firm gives dividends, increased research and development spending and is sitting on a pile of cash (that may be brought back under the new policies). Cihra says that if Apple has access to this cash, it will simply use it.
No “needle movers” this fiscal
Meanwhile, Apple Inc. (NASDAQ:AAPL) has received downgrades from various analysts ahead of Q1 earnings. Analysts feel that the iPhone sales will not be up to the mark throughout the fiscal. Barclays downgraded the stock to Equal weight from Overweight, and reduced the target to $117 from $119.
Barclays analyst Mark Moskowitz believes there is no major driver or “needle movers” in Apple’s model over the next 12 months. Moskowitz stated that there is not much expectation this fiscal year as smartphone sales have been slowed across the industry. However, he believes that sales will kick start in 2018.
As per Moskowitz, the iPhone maker has a “sticky ecosystem,” along with expanding software suite and large cash holdings. Not to forget, the 10th anniversary iPhone due later this year.