Premarket Stocks: Can New iPhones Juice Apple’s Spectacular Run?

Premarket Stocks: Can New iPhones Juice Apple's Spectacular Run?

Points Highlighted:

  • “We continue to be heartened by our customers’ response to the iPhone 12 lineup,” CEO Tim Cook told analysts in July. “We’re only in the early innings of 5G.”

  • Remember: The iPhone 12, the first to come with 5G capability, has been a huge hit. In its most recent quarter, Apple reported a nearly 50% year-over-year jump in iPhone sales to $39.6 billion.

That said: Plenty of unknowns remain, including what the iPhone 13 will cost and the timing of its launch.

Supply chain woes that could delay iPhone shipments also pose a risk.

“Pricing is the most important variable,” Bank of America analysts Wamsi Mohan and Ruplu Bhattacharya wrote in a research note.

“With discussions around supply constraints already rife in the industry, there are concerns around a delayed product cycle,” JPMorgan’s Samik Chatterjee and Joseph Cardoso told clients.

Apple has suffered a string of negative headlines recently. On Monday, the company released an urgent iPhone software update to address a vulnerability in iMessage that independent researchers say allowed spyware to infiltrate devices without users clicking on a link.And last Friday, Apple was ordered by a US judge to change its App Store policies following a lawsuit from Epic Games, the maker of Fortnite. The company is no longer allowed to prohibit developers from adding links within their apps to outside payment options, though the decision will likely be caught up in the appeals process.

“This opens up the possibility of developers getting customers to circumvent Apple’s payment system, which would reduce Apple’s net dollar revenue from the App store,” the team at Bank of America said.

These developments are ultimately less important for Apple’s stock price than the company’s new product launch, however. “The most important thing fundamentally is still hardware sales,” Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, told CNN Business.

Importantly, the judge in the Epic Games suit also said she could not rule that Apple is a monopoly, which could relieve some fears about other antitrust efforts against the firm. Watch this space: The Wall Street consensus is clearly that Apple’s stock has further to run. Out of 44 analysts that monitor the company, 35 have “buy” ratings, while the remaining nine are neutral, according to Refinitiv data. Not one analyst is recommending that his or her clients sell shares.

But that doesn’t mean gains will come all at once. Bank of America points out that Apple shares are typically lower the day after its iPhone reveal, but recover 30 to 60 days later. New data will offer clues on inflation

Stocks have climbed to record high after record high this year. But investors have been unable to shake the uneasy feeling that inflation could spiral out of control, hurting the economic recovery from the pandemic. The latest: New data arriving Tuesday could assuage some of these concerns. The US Consumer Price Index for last month is expected to show that prices rose 0.3% in August, down from 0.5% in July and 0.9% in June.

That could reassure Wall Street that some supply chain snarls are starting to work themselves out, reducing upward pressure on prices. Yet it could also be a sign that the recent boom in consumer demand that has been propelling the US economy is starting to wane. How the Federal Reserve interprets the data before it meets next week will be key. The central bank is weighing when to start pulling back its huge bond-buying program before it eventually begins raising interest rates from historic lows.

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