Apple Shares Look Attractive

Abhinav Davuluri: Apple has fallen more than 30% since October highs as the market has continued to punish the firm for its softer than expected December quarter guidance.

Shares are now squarely in 4-star territory for the first time since late 2016, after trading in 2-star territory as recently as September of this year, when we believed iPhone growth expectations were overzealous.

Now that the market has seemingly contemplated this fact, we believe it has overreacted, and we believe Apple shares look attractive as it boasts an appealing growth story driven by services and average selling price increases, in lieu of rising units. Our narrow moat rating stems from the fact that its valuable installed base is reluctant to switch from the iOS walled garden and its high-end products enabling Apple to charge a premium relative to comparable hardware.