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Apple Stocks Could Face A Tough 2019, Says Strategist


12/27/2018


Apple Stocks Could Face A Tough 2019, Says Strategist
The technology sector is poised to its "strongest headwinds in a decade" according to an equity research analyst which could negatively impact the shares of Apple in 2019.
 
Stagnant smartphone sales, falling chip prices and data and privacy controversies have made the current year a rough one for tech companies globally. Apple and its multiple Chinese manufacturing facilities are directly in the line of fire because of the slowing economic growth of China and the ongoing trade war between the United States and China. There has been a sell off in the broader tech stocks which also impacted shares of Apple – sending them down 7 per cent this year so far.
 
"We've seen (Apple) on valuations even lower than where they are today," Pelham Smithers, the managing director of London-based equity research and market intelligence firm Pelham Smithers Associates, said in an response to questions from CNBC news .
 
"And with the Qualcomm lawsuit, smartphone exhaustion and trade worries, we could easily test those historic lows, which would mean up to 25 percent downside from here," he said, while referring to the  long standing battle between Apple and chip maker Qualcomm over licensing issues and allegations of violation of intellectual property rights. The case has resulted in banning in the sale of some of the iPhones of Apple in some jurisdictions.
 
Still, Smithers said, as with robotic stocks, "this sell-off does seem to set us up for a rare buying opportunity." He however added that this segment could be presented with an opportunity later on in 2019 or even in 2020. That is the time when Apple would reportedly be launching its 5G handsets, "and we should have greater clarity on the various industry concerns."
 
Smithers and other industry watchers say that the rollout of 5G technology and handsets would present a large huge test for Apple. The state of the art 5G technology is expected to revolutionize the internet, and make faster internet connections and reducing the time delay for devices in the process of communication with one another.
 
"Ultimately they (Apple) are a consumer solutions company, and the first step to that is the hardware. And then it's what the hardware can do with the software," Smithers said on Thursday. "So as we move into the 5G era, it is the effectiveness of the handsets, of their tablets in this environment, either from an enterprise viewpoint or a consumer viewpoint that will be key."
 
Still there is overwhelming bullishness about Apple stocks by watchers despite the analyst's bearish outlook. Apple currently has 13 "strong buy" ratings from analysts, 10 "buy" and 20 "hold" ratings, with no "sell" or "strong sell" ratings according to Reuters. An average target price of $215 a share has been stated by these analysts.
 
(Sourcfe:www.cnbc.com)