Yahoo News Apple ETFs in Focus Ahead of iPhone 15 Launch Event
Apple AAPL is gearing up for its iPhone launch event at the Steve Jobs Theater in California on Sep 12. The technology giant is set to unveil the iPhone 15 series smartphones, including the Plus, as well as the high-end Pro and Pro Max variations.
The event will happen just days after the iPhone maker shed nearly $200 billion in market value in two days due to reports of China planning to expand a ban on the use of iPhones to government-backed agencies and state companies.
That said, ETFs having the largest allocation to the tech titan are in focus. Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF FTEC, iShares US Technology ETF IYW and Invesco QQQ QQQ have Apple as the top or second firm with a double-digit allocation and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Insights Into the New Launch
iPhone 15: Apple is projected to release four iPhone models. Speculations suggest two middle-range iPhones with 6.1-inch and 6.7-inch screens, and two high-end "Pro" models with enhanced cameras and titanium casings. The new phone is rumored to have a new design, improved camera system, faster performance, longer battery life and new software features. The significant change this year might be the introduction of a USB-C charging port, aligning with European regulations and offering users faster charging (read: 5 Sector ETFs Win on Q2 Earnings Beat).
The iPhone 15 Pro and 15 Pro Max will likely get a new chip called A17 that features a supertiny, 3-nanometer processor, Apple's smallest silicon to date. The iPhone 15 Pro Max may get a new 6x optical telephoto camera.
Apple Watch: Apple is expected to update two Apple Watch series with the launch of Apple Watch Series 9 and Apple Watch Ultra 2. While major design changes are rare for the Watch, internal upgrades, particularly in health sensors and chips, are anticipated.
Accessories: Apple's accessories, like AirPods Pro, might see updates to support USB-C. The AirPods Pro is also expected to introduce Adaptive Audio, enhancing user awareness of their surroundings.
Software: Apple is set to release the newest iOS version - iOS 17. This update offers a redesigned caller ID screen, enhanced autocorrect, a new Journal app, a standby dock mode, and more.
Will China Usage Ban Hurt Sales?
The Wall Street Journal disclosed last Wednesday that Beijing had issued a directive instructing officials within central government agencies not to bring iPhones into their workplaces or use them for professional purposes. Bloomberg News later reported that this prohibition could extend to employees of state-owned enterprises and government-affiliated institutions (read: What Lies Ahead for Apple ETFs After iPhone Use Ban?).
The rumored restriction on iPhones comes closely after Huawei, a Chinese tech giant, launched its new premium smartphone. Bernstein analyst believes an iPhone ban on all Chinese government employees could cut Apple's phone sales in China by as much as 5%. However, most analysts are also calling the reaction overblown, considering China is a much larger market beyond government agencies. Wedbush Securities thinks the ban would affect less than 5,00,000 iPhones of the roughly 45 million he expects to be sold in the country over the next 12 months.
Solid Fundamentals
Apple boasts the world’s highest stock market valuation, at nearly $2.8 trillion. It has seen a positive earnings estimate revision of 5 cents for the current fiscal year (ending September 2023) and a penny for the next fiscal over the past 30 days.
Apple currently has an average brokerage recommendation (ABR) of 1.64 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 29 brokerage firms. The current ABR compares to an ABR of 1.64 a month ago based on 29 recommendations. Of the 29 recommendations deriving the current ABR, 18 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 62.07% and 10.34% of all recommendations. A month ago, Strong Buy made up 62.07%, while Buy represented 10.34%.
Based on short-term price targets offered by 27 analysts, the average price target for Apple comes to $205.07. The forecasts range from a low of $140.00 to a high of $240.00.
Currently, Apple carries a Zacks Rank #3 (Hold) and a Growth Score of B, suggesting that the iPhone maker is primed for growth. Apple stock is cheap, trading at a P/E ratio of 29.47 compared with Amazon’s AMZN 61.94 times, Netflix’s NFLX 37.16 times and Microsoft’s MSFT 30.67 times (see: all the Technology ETFs here).
ETFs in Focus
Technology Select Sector SPDR Fund (XLK): Apple accounts for 21.7% share
Vanguard Information Technology ETF (VGT): Apple accounts for a 22.7% share.
MSCI Information Technology Index ETF (FTEC): Apple makes up 22.3% of assets.
iShares US Technology ETF (IYW): Apple makes up 17.5% of the assets.
iShares Russell Top 200 Growth ETF (IWY): Apple accounts for 13.9% of shares.
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Vanguard Information Technology ETF (VGT): ETF Research Reports
