The tech sector took a hit from Microsoft earlier in the day, but Apple gained on Thursday. In our weekly review, we noted that Microsoft warned of a strong dollar hurting profits. A strong dollar has a correlation with falling earnings for US companies. Apple has a lot of revenue in non-dollar currencies, so converting back into a strong dollar will hit profitability. This is what Microsoft is saying.

Also read: Apple stock price target on falling revenues.

Apple moved some iPad production from Vietnam to China because of the covid restrictions in China. The main revenue driver for Apple is the iPhone, and last year it sacrificed some iPad production to make more chips for the device. This may be an example of trying to maximize Chinese production once it comes on stream. Recent reports from China show that restrictions are being relaxed and manufacturing facilities are back online. 50% of Apple’s revenue goes to the iPhone, while the iPad is a meager 7%. The Chinese margins are 42% compared to 35% for the EU and 37% for the US.
Some eyebrows were raised when we produced our deep dive investment bank research into Apple and set a price target of $100. The outlook is decidedly mixed and we should note price targets are for a year. We assumed a modest 10% reduction in revenues. Both P/E and relative value P/E valuations were outlined.

On Thursday, Evercore noted limited growth in revenue from the App Store. Apple did well despite the tough environment as the US equity indices finished higher. Apple and the broader stock market will be watching Friday’s employment report.

The price target for the stock was $400.

The timing is perfect for Friday’s employment report as the resistance at $150 is now complete. The 200 day moving average will be tested if a sustained move ensues. There is a chance for a Death Cross signal if the 50-day moving average crosses the 200 day moving average. There is huge support at $138.
AAPL chart daily.

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