The Ratings Game: Apple will be ‘more resilient’ than peers amid disruption, analyst says in upgrade

Apple Inc. should be “more resilient” than its competitors amid ongoing disruptions to global supply chains and demand, according to one analyst.

Oppenheimer’s Andrew Uerkwitz upgraded Apple’s stock AAPL, +6.00% to outperform from perform Monday, writing that the company looks poised to withstand global economic challenges. He argued that the shares look compelling following a recent pullback: Apple’s stock has dropped about 9% over the past month amid concerns about the coronavirus outbreak and its impact on the company’s ability to manufacture products and drive consumer demand.

See more: Apple’s stock rises after Oppenheimer turns bullish, says stock is ‘oversold’

Shares are up 3% in Monday trading after falling during six of the prior seven sessions.

“Given the late stage smartphone adoption and Apple’s stronger resistance to competition, we expect temporary shifts of iPhone shipment between product cycles to have an immaterial impact on the stock,” he wrote. Uerkwitz thinks Apple’s products and services will outperform those of competitors during “uncertain times.”

Apple warned in mid-February that it wouldn’t meet its previously issued March-quarter forecast due to impacts from the coronavirus, though Chief Executive Tim Cook said last week that it seems as if China, a key manufacturing hub for Apple, is getting the coronavirus outbreak under control. He told Fox Business that factories have been able to reopen there and are now “in ramp.”

Over the longer term, Oppenheimer’s Uerkwitz is upbeat that Apple will be able to prevent market-share erosion given that the company has a strong lead on competitors in tablets, smartwatches, and earphones, helping Apple further lock users into its ecosystem even as there may be less differentiation in terms of smartphone features.

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Apple has “a strong balance sheet, affordable luxury products in must-have product categories, and high competence in supply chain management,” he concluded, and its stock looks “oversold” amid the public-health panic.

Shares have slipped 4% so far this year as the Dow Jones Industrial Average DJIA, +2.41% has lost 11%.