Apple stock jumped Monday after a Wall Street firm touted the iPhone maker ahead of its quarterly earnings report. The news Evercore ISI added Apple to the firm’s tactical outperform list, helping shares climb more than 1% in Monday’s session. Analysts said Apple’s stock may be able to advance higher on a late October earnings report that merely matches Wall Street estimates, so investors should be positioned accordingly. That’s because the stock has lagged in recent months and investors have lowered their expectations into the quarter. Apple entered Monday’s session about 3% below its all-time closing high of $234.82 a share set on July 16. The S & P 500 , by contrast, is up a little more than 3% over the same stretch. “Sentiment on Apple has turned more bearish in recent weeks, and we think buyside expectations are likely lower than current consensus estimates,” analysts wrote in a Sunday note. “Against this backdrop, we expect Apple to deliver in-line results against current estimates, which should enable the stock to work higher.” The firm, which maintained its buy-equivalent rating on the stock, also said the market has remained too focused on potentially softer iPhone demand in China, Apple’s second-largest market, arguing that this risk is overstated. Any weakness can be offset by “a strong upgrade cycle in the US where our survey work points to strong upgrade demand, driven in part by AI,” the analysts contended. Big picture Apple will post results on Oct. 31, and it’s a quarter where management can prove the naysayers wrong. Bears have long harped on Apple’s business in China as a reason to sell because its smartphone market has become increasingly competitive as domestic players like Huawei grab share. The concerns have been partially overshadowed by optimism regarding Apple’s new artificial intelligence capable iPhones. The iPhone 16 models were released in late September and will soon feature a suite of AI tools called Apple Intelligence. These should be rolled out to users in the coming weeks. Bottom line We’re not recommending investors add to Apple ahead of quarterly earnings. However, we do agree with Evercore’s optimism on AI iPhone integration, and its ability to usher in an upgrade cycle for Apple’s flagship device. We’ve long contended that innovative features like these will encourage users to switch up their iPhones for newer models. But with our “own it, don’t trade it” view still intact on Apple stock, it’s acceptable for the upgrade cycle to get off to a slower start. “I’m for the elongated [upgrade] cycle,” Jim Cramer said on Monday. “They don’t have to have the [iPhone 16] to be perfect. They just have to have demand over time.” (Jim Cramer’s Charitable Trust is long AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Tim Cook, chief executive officer of Apple Inc., greets customers during the first day of in-store sales of Apple’s latest products at Apple’s Fifth Avenue store in New York, US, on Friday, Sept. 20, 2024.
Victor J. Blue | Bloomberg | Getty Images
Apple stock jumped Monday after a Wall Street firm touted the iPhone maker ahead of its quarterly earnings report.