The Apple Barometer is the name of Ticonderoga’s look at a basket of companies in Apple’s supply chain with “a high concentration of sales generated” from the Mac, iPad, and iPhone maker. The financial services firm believes it that this provides a more accurate indicator of Apple’s own performance than the more common method of looking at manufacturers like Hon Hai Precision Industries’ Foxconn unit, as Apple represents just 30% of that manufacturing giant’s business.
Source: Taiwan Stock Exchange, Ticonderoga Securities LLC
“While we remain cognizant that share shifts, inventory adjustments and builds ahead of demand occur in the Apple supply chain,” he wrote in a research note obtained by The Mac Observer, “we believe the overall direction compared to the historical performance provides us with further confidence in strong trends at Apple.”
Looking at the data from May, the analyst said that sales for the companies in the barometer rose 9.6% over April, which is well above the 2.6% average sequential growth over the last six years. Adding in muted projections for June of 0.8% month-over-month growth, the analyst said that these numbers for Apple’s suppliers would result in the above-mentioned 1.8% sequential growth for Apple itself during the June quarter, which is Apple’s 3rd fiscal quarter.
1.8% sequential growth might not sound like a lot, but remember that Apple projected a 7% decline in sales, in part due to slowing economic growth.
In the research note, Mr. White wrote, “In our view, no company is entirely immune to a meaningful economic slowdown; however, we believe Apple has the best product cycle in the tech world, and the company’s performance in the last downturn was head and shoulders above the group.”
Mr. White’s price target for AAPL is at the high end of Wall Street’s range, at US$612 per share, and he maintained his “Buy” rating on the stock.
As an indication of just how bullish he is on Apple, he told his clients that, “Essentially, if there is just ONE tech company to own right now to have tech exposure but not be overly exposed to the uncertain environment, we believe it is Apple.
Shares in Apple ended the day higher at $326.62, up $0.72 (+0.22%), on moderate volume of 11.8 million shares trading hands.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.