Dow Jones Falls As Microsoft Share Price Target Rises, Apple iPhone 12 Pre-Order Data Mixed
The Dow Jones Industrial Average (^ DJI 0.00% ) went into negative territory late Monday morning as investors grapple with increasing COVID-19 cases in the country and lingering uncertainty over a new economic stimulus bill. While House Democrats and President Trump support multibillion-dollar packages, Senate Republicans favor a much smaller, more focused approach. The Dow was down about 0.3% as of 11:30 a.m. EDT.
Actions of Microsoft (MSFT 0.98% ) The Dow Jones underperformed despite an optimistic analyst who raised its price target due to the growth potential of the company’s cloud computing. During this time, Apple (AAPL 2.15% ) The stock stalled as pre-order data for the iPhone 12 was mixed.
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Microsoft’s price target driven by cloud growth
Software and cloud computing giant Microsoft is expected to release its first fiscal quarter results on October 27. When Microsoft last posted in July, the company posted surprisingly strong revenue growth despite the pandemic. Revenue grew 13% in this quarter, thanks to the Azure cloud platform, strong OEM sales of Windows, and growth in games and Surface hardware.
Analysts are not so optimistic for the September quarter, with the average estimate calling for revenue growth of just 8.1%. But Jefferies analyst Brent Thill has enough faith in the tech giant to raise its target for the stock price before its next report. Jefferies raised his goal from $ 240 to $ 260 on Monday.
Thill argues that Microsoft is one of the best software companies in the world, with a sustainable financial model. He sees the Azure cloud platform continuing to show strong growth numbers, helping to offset any weakness in on-premises software license sales. Thill expects potentially low margins this year as Microsoft invests in his business, and he admits stocks are trading for a historically high valuation. But these negatives did not outweigh the positives in the analyst’s eyes.
Microsoft shares were not boosted by analyst action on Monday and were down about 0.8% by late morning.
Mixed pre-order data for iPhone 12 for Apple
The first day of pre-orders for Apple’s new iPhone 12 smartphone line-up went well, according to TF International Securities analyst Ming-Chi Kuo. Kuo estimates that Apple sold up to 2 million devices in the first 24 hours, compared to just 800,000 devices for the iPhone 11 launch last year. Demand in China has reportedly been strong, especially for the iPhone 12 Pro.
While this sounds like good news for Apple, Kuo also believes that the iPhone 12 launch will be a long way from the iPhone 11 launch in terms of the first full weekend of pre-orders. Kuo expects Apple to sell around 9 million iPhone 12 devices during this period, compared to 12 million for the iPhone 11.
Part of the problem is that only the base iPhone 12 and iPhone 12 Pro are currently available for pre-order. The $ 699 iPhone 12 Mini, priced the same as the base iPhone 11 last year, won’t be available for pre-order until early November. The cheapest iPhone 12 model available for pre-order right now is the base model at $ 799, and iPhone users looking for an upgrade also have the option of the $ 399 iPhone SE and the iPhone 11 at $ 599.
Ultimately, how well Apple’s iPhone 12 sells will depend on consumer interest in 5G, the state of global economies as the COVID-19 pandemic escalates, and whether or not Congress will pass a new stimulus bill anytime soon. Apple shares were pretty much unchanged as of late Monday morning.
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