After climbing 48% in 2023, Apple (AAPL -0.35%) stock has underperformed so far in 2024. The stock is down about 11% year to date, in part, due to worries regarding slowing iPhone sales in China. However, one Wall Street analyst sees this price dip as a buying opportunity.
Earlier this week, Bank of America Securities analyst Wamsi Mohan renewed his $225 price target on the stock. That price target represents a potential upside of about 31% in the next 12 months or so over the current share price of $171.
Is Apple stock a buy?
A recent report from Counterpoint Research showed that iPhone sales in China fell 24% year over year in the first six weeks of the year. This seems to be what is weighing on the stock right now, but Mohan noted that Apple has an important option for dealing with this.
Apple does an effective job of lowering the prices of its older phones to maintain steady demand, according to Mohan. The analyst also says Apple's long-term trend of shifting customers toward higher-value units can help offset weak sales in China. China generated 21% of Apple's operating profit last quarter.
China sales are getting the blame for the stock's recent performance, but the shares were due for a correction. The stock traded at a high price-to-earnings ratio of 32 at the end of 2023 and now trade at a more reasonable P/E of 27, which is still higher than the market average.
Despite weakness in China, Apple's earnings per share grew 16% year over year last quarter, mostly driven by growing revenue in the higher-margin services category, and the company's ongoing share repurchases.
It might take a while for the market to come around, but Apple has plenty of strengths outside of China to deliver returns to investors.
