It's time to load up on shares of Apple (AAPL) after the stock's less than joyous start to 2022, argues Deutsche Bank.
"Considering a healthy demand backdrop and Apple's strong product portfolio across its product lines, we believe the Street estimate for CY22 revenue growth of only +5% (vs. Deutsche Bank estimate of +9%) is too low with the push-out of some revenue from calendar year 2021 already accounting for ~3 percentage points of growth, and we therefore believe there is an upward bias to estimates as we go through the year," said Deutsche Bank analyst Sidney Ho in a research note on Tuesday.
Ho reiterated his Buy rating on Apple's stock. But, the analyst lifted his priced target to $200 from $175 — assuming roughly 16% upside from current trading levels.
The average sell-side analyst price target on Apple is $177, according to Bloomberg data.
Shares fell 1.5% in pre-market trading amid ongoing blood-letting in tech stocks with 10-year Treasury yields climbing. The push higher in yields has sent Apple shares down about 3% year-to-date, while the tech stock heavy Nasdaq Composite has dropped nearly 6%.
Ho thinks the inflationary environment should be a tailwind to Apple's stock, not a headwind.
"In addition to strong business fundamentals, we think AAPL shares will benefit from a flight to quality in an inflationary environment," Ho adds.
To be sure, Ho may be alone in that assessment right now on Apple as a great play on inflation.
In a new survey of fund managers by Bank of America, investors slashed their net overweight exposure to tech to 1% in January. That marked a 20% decline month-over-month, and represented the lowest level of bullishness on tech by fund managers since December 2008.
"Central bank tightening remains the number one risk to markets in 2022," said BofA chief investment strategist Michael Hartnett.