Tech giant Apple Inc. (Nasdaq: AAPL) kicked-off August with a cool $1 trillion in market cap- making history as the first U.S. company to achieve this. The ‘trillion-dollar baby’ has had a solid 2018, with shares jumping almost 24%. In other words, Apple is beating the market, with the S&P 500 ETF (SPY): just under 6%.

Yet, is Wall Street celebrating? Whispers of a weakening smartphone market have some experts spooked. Some say Apple is massively undervalued. Others wonder what will be in store for the iPhone’s average selling prices- when smartphone momentum is waning.

The Bullish Camp Sees a Super Cheap ‘Buy’

Monness Crespi analyst Brian White (Profile & Recommendations) is Apple’s biggest bull on Wall Street. In White’s latest note, he sees a tech giant that “remains one of the most underappreciated stock in the world.” White constantly is out singing Apple’s praises as an “unbelievably” and “very, very cheap” stock.

Worthy of note, White has 196 ratings on Apple, and has been bullish on the stock as long as he’s covered it- for almost eight years now. White has been betting on the tech giant since before the iPad became a huge hit- and anticipated the product’s success. Even in 2010, White boasted a Street-high price target.

The analyst recently reiterated a Buy on the company following a killer July Apple Monitor performance. For context, White’s Apple Monitor index tracks sales of nine key publicly-traded Apple suppliers based in Taiwan.

It was a “record July” for the companies who posted sales in White’s Apple monitor. Sales rose 21% month-over-month; impressive against the usual July performance of 10% growth over the last thirteen years. White considers this the “best July on record for our Apple monitor.”

“Given Apple has historically introduced its latest iPhone innovations in September, we believe this year’s ramp has already shown up in the supply chain,” adds White.

The analyst bets Apple could hit $275, or 31% in upside potential. After all, Apple’s valuation “remains depressed.” Moreover, “Apple is heading into the seasonally strongest time of the year with a new iPhone cycle on the horizon,” cheers White. Next month, the company is anticipated to release three iPhone models with 5.8-inch, 6.1-inch, and 6.5-inch screen sizes.  White’s bet: look out for “Planet Apple to grow much larger.”

The Sidelined Fear the iPhone Variable

Maxim analyst Nehal Chokshi (Profile & Recommendations) can’t take his eyes off a smartphone market “clearly in decline.” The analyst forecasts iPhone average selling price (ASP) jumps will “likely… turn into declines.” Meanwhile, consider the compound annual growth rate (CAGR), a key measure of growth over multiple time periods. Chokshi warns that based on his analysis, “services [are] are unlikely to drive better than a 5% EBIT CAGR.”

Accordingly, the analyst hedges his bets on Apple. Chokshi reiterates a Hold rating on the stock with a $200 price target (5% downside potential). Notably, Chokshi earns 26.5% in average profits on his Apple recommendations.

“iPhone ASP y/y trajectory strengthens, but underlying key metrics for iPhone unit sell-out and normalized services q/q growth is weak,” explains the analyst.

Apple’s outlook suggests “iPhone unit sell-out [is] on path to deteriorating to mid- to high-single-digit y/y declines,” writes Chokshi, but on a positive note: “one more quarter of high teen iPhone ASP growth will drive strong overall revenue growth.”

The Long-Term Picture Is Shaky

Oppenheimer analyst Andrew Uerkwitz (Profile & Recommendations) likewise weighs in from the sidelines, pointing to the smartphone factor in the equation as well.

Uerkwitz is apprehensive on Apple’s long-term smartphone competitive upper hand: “We are unconvinced that iPhone can remain competitive among the upcoming wave of flagships. Longer term, we expect niche market segments (IoT) and services (voice) to erode Apple’s smartphone-centric platform advantage.”

Therefore, the analyst maintains a Perform rating on AAPL stock. However, though Uerkwitz is cautious on Apple’s smartphone momentum, he is optimistic on “impressive momentum” in Wearables. Specifically, the Apple Watch, AirPod, and Beats products.

Uerkwitz points out that Wearables vaulted 60% year-over-year in the third fiscal quarter, and sales of the Apple Watch rose in the mid-40s year-over-year. Meanwhile, the analyst believes, “Apple Watch’s momentum validates its market-leading position, unchallenged since release.”

That said, even with a “solid” third fiscal quarter print and stronger-than-anticipated fourth fiscal quarter guide, it’s not enough to sway Uerkwitz from a neutral stance. Bottom line, the analyst is “skeptical over Apple’s ability to maintain its market dominance in the mid-to-long term when competition moves away from hardware to platform-agnostic software and services.”

Wall Street Analysts Give Their Verdict

Overall, Wall Street sizes up Apple as a ‘Moderate Buy’ stock. The bulls edge out the cautious on the tech giant. In the last three months, Apple has scored 15 buy recommendations from best performing analysts and has 12 analysts hedging their bets.

Yet, the consensus price target hints at caution baked into expectations here. The 12-month average price target of $213.92 reflects a slight upside potential of 2%. Wall Street needs to see more from the big AAPL empire before getting more confident on the story.

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