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Munster on Apple: There's a disconnect between the fundamentals and headlines

As Apple (AAPL) slowly recovers from the melee over its China revenue miss, one analyst is calling for more optimism about the tech giant given its strong fundamentals.

Gene Munster, longtime tech analyst and Loup Ventures managing partner,  is still bullish on Apple stock for “the simple reason is that the fundamentals [and] the competitive landscape really hasn’t changed here.” Apple is up more than 3% in early trading on Friday.

Munster’s belief is that there’s a “disconnect between the fundamentals of Apple and the headlines,” because the company is on track to report its best earnings quarter in the history of the company — despite the miss.

Despite the China concerns, Munster is still bullish on Apple. (Photo: Reuters)

Apple CEO Tim Cook’s letter that warned of the lower guidance included a paragraph about how the company is expecting to “set all-time revenue records” in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands, and Korea.

Cook also wrote that revenue outside of the iPhone business grew by almost 19% year-on-year, and the company had set an all-time revenue record for services, wearables, and Mac.

‘The business is actually doing really well’

Wednesday may have been arguably one of the “darkest days in Apple’s history,” but Munster believes that fears over a China slowdown are likely to subside soon under Cook’s leadership.

“That cash [from the projected earnings] is something that Tim Cook has control of and he can use that to incentivize the stock,” Munster said. “People don’t really wanna hear it today, but the business is actually doing really well.”

Munster added Apple would ultimately be the best-performing FAANG stock, noting that others like Amazon (AMZN) and Google (GOOGL) are likely to come under regulatory pressure this year.

NEW YORK, NY – OCTOBER 30: Tim Cook, CEO of Apple laughs while Lana Del Rey (with iPad) takes a photo during a launch event at the Brooklyn Academy of Music on October 30, 2018 in New York City. Apple debuted a new MacBook Air, Mac Mini and iPad Pro. (Photo by Stephanie Keith/Getty Images)

Not so bullish

Other analysts are less bullish on Apple, pointing to signs of a possible erosion in customer loyalty, the high cost of iPhones, and growing competition from Chinese smartphone makers.

Apple has responded by offering promotional programs for new customers to trade in their Android phones for credits that can be used to buy iPhone XS and XRs, hoping to lure competition away from Chinese brands like Huawei, Oppo, Vivo and Xiaomi.

Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.


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