Is May a good month for buying Apple shares?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the outdoors, enjoys… read more.
on May 6, 2021
  • Apple shares have weakened from their recent highs above $140
  • Morgan Stanley raised its target on Apple from $158 to $161
  • Raymond James maintained a "buy "rating on Apple with a $185 price target

Apple shares have weakened from their recent highs above $140, and the current price stands around $128. Apple reported better than expected second-quarter results last week, and the company increased the quarterly dividend by 7.3%.

Fundamental analysis: Morgan Stanley raised its target on Apple from $158 to $161

Apple shares are trading below the $130 level in the first trading week of May, but according to the technical analysis, shares of this company continue to trade in a bull market. Investors are selling tech-related companies amid concerns about the rising interest rate and uncertainty over an upcoming jobs report.

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Investors have started to behave nervously after comments from Treasury Secretary Janet Yellen, who said that the FED might need to hike the interest rate. Apple reported second-quarter results last week; total revenue has increased by 53.7% Y/Y to $89.6 billion while the GAAP EPS was $1.40 (beats by $0.42).

Total revenue has increased above the expectations (+$12.31 billion), and the company declared a $0.22/quarterly share dividend, which represents a 7.3% increase from the prior dividend of $0.205. The gross margin rose 42.5% from a year ago, while the net income more than doubled and rose to $23.6 billion from $11.25 billion.

Each geographic segments has reached strong double-digit growth: Americas $34.3 billion (+35%); Europe $22.3 billion (+56%); China $17.7 billion (+88%); Japan $7.7 billion (+9%); Rest of Asia Pacific $7.5 billion (+94%). Another positive information is that iPhone sale advanced above expectations and topped $47.9 billion in net sales.

“We are proud of our March quarter performance, which included revenue records in each of our geographic segments and strong double-digit growth in each of our product categories, driving our installed base of active devices to an all-time high,” said CFO Luca Maestri.

Apple expects that this trend continues in the third quarter while the company’s management authorized an increase of $90 billion to the existing share repurchase program. Analyst firms remain positive on Apple after the second-quarter report; Raymond James maintained a “buy “rating with a $185 price target while Morgan Stanley raised its target from $158 to $161.

Morgan Stanley is impressed by the second-quarter results and with the fact that Apple boosted the dividend and buyback program.

Technical analysis: Apple shares continue to trade in a bull market

Technically looking, Apple shares could advance above the $140 resistance level this month; still, if the U.S. stock market enters a more significant correction phase, the share price could be at much lower levels.

Data source: tradingview.com

If the price jumps above $135, it would be a signal to trade shares, and the next target could be around $140. Rising above $150 supports the continuation of the bullish trend for Apple shares, but if the price falls below $110, it would be a strong “sell” signal.

Summary

Apple shares have weakened from their recent highs above $140 even though the company reported better than expected second-quarter results last week. Raymond James maintained a “buy “rating on Apple with a $185 price target, while Morgan Stanley raised its target from $158 to $161.

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