Benzinga - by MarketBeat, Benzinga Contributor.
It's been a funny couple of months for shares of Apple Inc (NASDAQ: AAPL). Traditionally, one of the market leaders who you could nearly bet would be moving in lock-step with the likes of Meta Platforms (NASDAQ: META) or Amazon.com Inc (NASDAQ: AMZN), this year has seen the iPhone maker's fortunes diverge significantly from its peers.
Even against the benchmark S&P 500 index, Apple is trailing, with the former's 11% gain since the first week of the year now appearing very attractive against the latter's -9% drop. For context, Amazon is up about 30%, while Meta is in a class of its own with a 50% return so far this year.
The whole thing raises a ton of questions: Why did Apple have such a poor Q1? Will it continue? When does this become a buying opportunity that is too good to miss?
Perfect Storm of Negative Updates
The big one is the antitrust lawsuit that was filed against Apple by the U.S. Department of Justice last month, alleging Apple has "violated the Sherman Act by using its iPhone to prevent other companies from offering competitive services." Needless to say, Apple is spooked and said in a statement that if successful, "it would hinder our ability to create the kind of technology people expect from Apple."
While the current thinking on Wall Street is that the DOJ is unlikely to win the case outright in court and is more likely to result in a fine, it could take years to come to a conclusion. As a fresh negative headwind, it couldn't have come at a worse time for Apple stock. App developers in the European Union are now allowed to bypass the company's traditional 30% cut; Apple has thrown in the towel on its electric vehicle project, which CEO Tim Cook once called "the Mother of all AI projects" and there are signs that unit shipments for the iPhone are starting to look a little soft.
Buying Opportunity Opening Up
Consider this: Apple's shares finished last week trading at $169, which is below six of the most recent analyst updates going back to the start of March. Morgan Stanley reiterated its Overweight rating on Apple shares towards the end of March and gave the stock a $220 price target. This echoed the Outperform rating from Wedbush that same week, only the latter giving Apple a $250 price target.
DZ Group and UBS both reiterated their Hold ratings in the last week of March but maintained their price targets at $180 and $190, respectively. Loop Capital also rated Apple a Hold last week but with a refreshed price target of $170.
Considering Getting Involved
Apple is still a beast, and Friday saw Citi name them as one of their top-rated Buy stocks with an estimated 27% return potential. Don't be surprised if that's just the first in a handful of bullish updates in the coming weeks.
The article "Bargain Alert: Apple Shares Are Starting To Look Undervalued" first appeared on MarketBeat.