Apple is approaching its highest price amid optimism for demand growth

Shares of Apple rose on Tuesday as the world’s most popular phone maker reached close to record highs and optimism grew that the company’s latest iPhone models were in high demand from markets.

Stocks rose as much as 1.9% and easily outperformed the broader IT sector of the S&P 5000 which fell 0.5%. The only gain was from Apple’s upward rally, which rose more than 17% from August and nearly 60% above the January price.

At current levels, the share price is 2.5% lower than its all-time high of about a year ago.

The latest optimism came after positive comments from CEO Tim Cook, who spoke with the German newspaper Bild on September 30, saying that sales of the new iPhone 11 had a very strong start, and that he could not be happier.

Apple is initially expected to report fourth-quarter results on October 30, and analysts are looking for 41,900,000 iPhones sold and shipped in the quarter, according to Bloomberg estimates. This represents an annual decline of 14.5 per cent. This product is crucial for the company. According to data compiled by Bloomberg, more than 60% of Apple’s revenue in 2018 came from iPhones only.

Cook’s comments seem to confirm some early readings from analysts. Evercore ISI writes that its survey was “positive”. Despite concerns about its role and new additions, 40% of respondents are interested in buying a new iPhone. This level of interest is “in line to slightly better” said analyst Amit Daryanani. The results of the survey increase our confidence that Apple can beat expectations as usual, Daryanani added.

On Monday, JPMorgan wrote that Apple’s 2019 products were “stronger than muted expectations,” adding that the launch of the latest releases “appears strong at least in the U.S.”

But these bullish views are almost unanimous. Apple is expected to release its first 5G iPhone next year. Capital Markets said in a survey that demand is soft for the new iPhones, despite the camera upgrade and a price reduction of $50. In September a study by Piper Jaffray pointed to the  limited excitement” of the new versions given the ” the promise of 5G devices on the horizon.”


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