Apple shares are weakening the market. Why the stock might still be performing.

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Is there something wrong with it

Apple

?

After a staggering 81% rally in 2020, tech giant shares have struggled so far in 2021. Apple shares (ticker: AAPL) are down more than 9% for the year, and the

S&P 500

nearly 11 percentage points. While it’s certainly true that tech stocks in general have suffered this year, Apple has also been performing the

Nasdaq Composite

(down more than 3% for the year) and the rest of the megacaps tech.

Bernstein analyst Toni Sacconaghi took a look at this situation on Friday, and found that Apple’s behavior has nothing to do with broader technical trends than it does with the unique dynamics in Apple’s shares. While bulls may think the recent weakness is a buying opportunity, Sacconaghi thinks otherwise. It maintains its Market Performance rating and the $ 132 target price.

Apple on Friday is up 0.2%, to $ 120.32.

Sacconaghi believes the weakness in Apple’s shares this year highlights two fundamental features. One, a major chunk of Apple’s performance in 2020 came from an increase in stock valuations. Wages rose, but the stock accumulated even more. Apple’s share expanded by 51% last year, more than any of the other FAAMG stores. In contrast, in 2020 there were several increases of 4% for

Amazon,

15% for

Microsoft

and Alphabet and 16% for

Facebook,

analyst notes. That largely doesn’t reflect the expectation and then launch of the iPhone 12 family, the company’s first generation of Apple phones for 5G networks.

Two, there is also a sense that there will be no obvious factors, such as new yields, that could move the stock higher immediately. Last year at this point, investors were still waiting for the arrival of iPhone 12. There is no such excitement about iPhone 13.

“Over the past year, Apple has continued its traditional historical quarterly pattern outperforming before the release of iPhone products, and not performing better thereafter. , ”Sacconaghi wrote in a research note.

“Accordingly, should investors look to follow the pattern, and become obese in the coming months? We think not yet – Apple’s diversification is still rich against history, Apple faces strong iPad and Mac comparisons in the second half, and it looks like next year’s iPhone ring won’t bring new action strong. ”

He notes that all of Apple ‘s case this year revolves around the company’ s potential entry into the car market, a potential that is years away. at best, and may never happen. Apple could launch other new hardware – for example, there has been profitability about virtual reality glasses – but there are no obvious catalysts in the stock.

Sacconaghi Decision: There is no rush to buy Apple shares.

Write to Eric J. Savitz at [email protected]