Worries Mount For Apple Bulls As Stock Takes A Dive, Analysts Eager For Q4 Results

As Apple Inc. (NASDAQ:AAPL) shares continue their downward trend, even the company’s most optimistic supporters are growing anxious ahead of the fourth-quarter earnings report. The tech giant needs to address several key issues to ease these concerns, says Melius Research analyst Ben Reitzes.

As reported by Barrons, Reitzes, one of Wall Street’s most bullish analysts, maintains a Buy rating and a $240 target price on Apple stock. This is significantly higher than the average target price of around $200, as per a FactSet poll.

However, with Apple stock lingering around $179, down 5% over the past three months, the company faces an uphill battle to justify its premium valuation. Reitzes identifies four key challenges that Apple must tackle: growth, China, artificial intelligence (AI), and its search engine strategy.

Despite the expectation of a fourth consecutive quarter of revenue decline, Reitzes predicts 4% revenue growth for the December quarter, citing the potential benefits of iPhone 15 upgrades and increased store traffic.

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China, accounting for approximately 20% of Apple’s revenue, presents both challenges and opportunities. Reitzes emphasizes the need for a clear strategy regarding the iPhone, app store, and supply chain in the country. The company also needs to navigate the Chinese government’s strict controls on foreign applications on iPhones without incurring additional costs.

Investors are also eyeing Apple’s approach to AI technology as a potential growth driver. Reitzes suggests that an improved Siri and other generative AI products could help reinvigorate demand for Apple devices.

Finally, with Google’s antitrust trial highlighting Apple’s reliance on the annual payments it receives from Google for being the default search engine on iPhones, Reitzes suggests Apple might need to consider launching its own search engine.

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