Written by Brenda Nakalema

Apple stock get a big target price boost amidst improved supply chain problems

Despite the fact that tech stocks faced a rough Friday, Apple stock was riding high way above the storm. Wells …

Despite the fact that tech stocks faced a rough Friday, Apple stock was riding high way above the storm. Wells Fargo raised the stock price target to $205 from $165, which meant a 25% gain from Thursday’s closing levels.

For analysts like Aaron Rakers and his team at the bank, there is a bullish feeling unlike others on Wall Street; the average price target for Apple among analysts surveyed by FactSet is $179.

“We expect a focus on any commentary supportive of a belief that the supply chain is improving, continued confidence in strong end-user demand across the portfolio, as well as services/ subscriptions momentum,” said a team of analysts at Well Fargo.

It appears as though the confidence in the supply chain is shared by others as well.

“Supply constraints are poised to ease in the first half of the calendar year while Apple also benefits from ongoing share gains at the high end of the China market,” said Angelo Zino, an analyst at CFRA research. He also added that supply constraints likely limited the upside to the previous quarters’ iPad sales, as Apple prioritized iPhone units.

The biggest part of Apple’s profits come from the sale of iPhones, and despite the high demand for the devices, the company has also been greatly affected by supply chain constraints. Even though an improvement in the supply chain would yield positive results, Rakers and his team view the opportunity in Apple stock as lying somewhere else.

“We believe the investment case for Apple has more to do with the company’s monetization of the installed base through an expanded portfolio of products and services (e.g. augmented reality/ virtual reality, auto), rather than the near-term setup,” the Wells Fargo group said.

In premarket trading on Friday, Apple stock was 0.7% lower, in tandem with the broader decline in the market. This year, the stock has dropped almost 10%, compared to a 6.5% fall for the S&P 500 index and a near 11% decline into correction territory for the tech stock heavy Nasdaq composite.