Apple’s (AAPL) upward momentum ran into a stumbling block on June 19, as fears of another COVID-19 wave caused the tech giant to reclose some of its stores.
Starting on Saturday June 20, Apple will shut down 11 of its stores in Florida, Arizona, North Carolina, and South Carolina. These closures represent a third of Apple’s stores in the four states.
Apple was among the first to close up shop outside of China earlier this year, but it had gradually been reopening stores.
Deutsche Bank analyst Jeriel Ong believes the move is one which could have wider ramifications on the “broader economic rebound.” Previously noting Apple’s re-opening strategy could pave the way for others to follow suit, the new closures could have the opposite effect and cause a renewed downturn.
“Given AAPL's size, we believe that their store opening/closure decisions to be based upon an abundance of analyses both internally and externally, and we note that AAPL has tended to be front-footed and early in their decisions (as seen by their 2/17 negative pre-announcement only half way into the quarter where they were one of the first to provide thoughts). Thus, it is possible that other businesses with a physical footprint may follow suit. Overall, we interpret this news negatively for the prospects of a smooth reopening of the U.S. economy,” Ong stated.
That said, Ong thinks the closures will have “little-to-no impact on the fundamentals.” Although Apple’s retail footprint spans the entire world, the 510 global stores, according to Deutsche Bank estimates, account for less than 10% of overall sales.
No change to Ong’s expectations for Apple, then. The analyst keeps his Buy rating and $350 price target as is. Apple shares are currently trading for roughly the same price as Ong’s target. (To watch Ong’s track record, click here)
Based on 29 Buys, 4 Holds and 1 Sell, the Street currently thinks Apple is a Strong Buy. However, the $340.23 average price target indicates the analysts expect shares to drop by 3% over the next 12 months. It is worth noting, though, that Apple’s current share price represents an all-time high. Accordingly, it will be interesting to see whether the analysts update their models or change their Apple ratings shortly. (See Apple stock analysis on TipRanks)
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