Dow Jones News: Apple’s iPhone SE would sell well; Coca-Cola forbidden
the Dow Jones Industrial Average (DJINDICES: ^ DJI) gathered Wednesday morning, up 1.6% as of 11:15 a.m. EDT. US Treasury Secretary Steven Mnuchin told Fox Business Network he expects most of the US economy to reopen by the end of the summer. This may give investors reason to be optimistic, but the pace of the post-pandemic economic recovery remains highly uncertain.
Actions of Apple (NASDAQ: AAPL) and Coca Cola (NYSE: KO) were up in the morning thanks to commentary from analysts. An analyst expects Apple’s budget iPhone SE to be a big seller in an environment of weak demand, and Coca-Cola has been defended after the company revealed double-digit volume decline for April.
Apple could have a blow on its hands
Despite supply chain disruptions that could delay the planned launch of 5G-enabled iPhones later this year, Apple managed to bring the Budget-conscious second-generation iPhone SE at the market. The $ 399 smartphone, which features a small 4.7-inch screen and is priced at $ 399, will be available at select retailers on April 24.
This low-cost iPhone comes as demand for a wide range of products and services is plummeting due to the novel coronavirus pandemic and the economic impact of measures put in place to contain the virus. Overall smartphone sales in the United States will almost certainly decline over the next several months, and Apple will not be immune. Analyst Ming-Chi Kuo expects iPhone shipments in Apple’s quarter to fall by as much as 25% from the period a year earlier.
Kuo is more optimistic about the iPhone SE. Based on delivery times, the analyst believes the new iPhone is selling better than expected. Customers could switch to less expensive devices due to economic uncertainty, or there could be pent-up demand for an iPhone with a smaller form factor.
With the iPhone SE $ 300 cheaper than the iPhone 11, the new budget phone may feature lower margins for Apple. At a time when sales of high-end phones are likely to be low, the tech giant the end result could take a major hit even if the iPhone SE is a home run.
Apple is expected to release its fiscal second quarter results on April 30. The company is unlikely to provide much advice, given the extreme uncertainty, but investors should have a better idea of how demand for the iPhone SE is going. at this moment. Apple shares were up 1.8% by late morning.
Analyst defends Coca-Cola
The beverage giant Coca-Cola beat analysts’ estimates at all levels when it released its first quarter results Tuesday, but the company’s commentary on sales trends was troubling. Coca-Cola said sales volume fell around 25% globally in April, due to a sharp drop in demand from out-of-home channels.
UBS analyst Sean King defended Coca-Cola on Wednesday, saying the long-term story has not changed. King sees Coca-Cola overcoming its short-term challenges, and he sees the potential for the company’s organic growth and free cash flow generation as reasons to buy the stock.
King expects Coca-Cola to navigate this challenging environment by prioritizing core SKUs, rapidly expanding its delivery and e-commerce capabilities, adjusting format and pricing, and reducing spend. The analyst sees Coca-Cola coming out of this crisis with its strength intact.
UBS has maintained its buy rating on Coca-Cola shares, despite falling demand, although its new price target of $ 54 is $ 1 lower than before. Coca-Cola shares rose 0.9% by late morning.
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