Apple stock is down 10% this year, but there are 5 reasons for investors to remain bullish, Wedbush says

• Apple stock is down about 12% this year but could still see stellar gains in 2024, according to Wedbush.
• The iPhone maker has 48% upside, the firm said, outlining five bullish tailwinds for the stock.

Apple stock has had a disappointing year so far, but there are still reasons for investors to stay bullish on the iPhone maker, according to Wedbush.

The firm pointed to a "black cloud" hanging over the company, with Apple shares sliding 10% for a loss of over $200 billion in market value so far in 2024. That loss comes amid demand concerns in China, where Apple is battling a government crackdown on iPhones and fierce competition from China-based rivals, like Huawei.

"It's clear that Apple is navigating one of the more difficult China demand environments we have seen the last 5 years as a combination of factors has created a perfect storm for Cupertino in this key market," analysts said in a note on Tuesday, estimating that iPhone sales in China would likely fall "moderately" below estimates in March.

But Apple stock still has the potential to deliver big gains this year, analysts said, maintaining their "outperform" rating and $250 price target on the stock, the highest estimate on Wall Street.

A rise to that level implies 48% upside for Apple, which Wedbush said could stem from five bullish factors:

1. iPhone sales could be strong overall this year. 2024 estimates are "hittable" despite some conservative 2025 estimates for iPhone sales, analysts noted.
2. There could be pent-up demand for iPhones, given how many users are due for an upgrade. Wedbush estimated there were around 270 million iPhones that could be swapped for a newer version, especially as Apple is set to roll out its iPhone 16 this year.
3. Services revenue for the company remains "rock solid," Wedbush analysts said. Apple pulled record-high revenue from the services side of its business over the first quarter, according to its latest earnings report.
4. The company is integrating AI into its devices. Apple is set to make an announcement on its progress with generative artificial intelligence at its Worldwide Developers Conference in June, Wedbush predicted.
5. Apple still dominates the smartphone market, with 2.2 billion of its devices being used around the world. That's the "strongest installed base of any company," analysts noted.

Over the medium term, investors are eyeing Apple's next quarterly earnings report, which is set to roll out on May 2.

"The Street is bracing for a brutal March quarter and soft June guidance which we believe could be the last few quarters of this growth storm as Apple starts to see a renaissance of growth heading into the September quarter and FY25," Wedbush said. "While some patience is required to navigate this China weakness, we believe the seeds for an Apple growth turnaround are being planted in the field."

Most analysts on Wall Street have maintained a "strong-buy" rating for the stock, according to data from the Nasdaq Exchange. The average price target for Apple stood at $202 a share, implying a 20% upside for the stock.