Moody’s Upgrades Apple’s Long-Term Credit Rating to ‘AAA’

Apple (NASDAQ: AAPL) received an upgrade to its credit rating. On December 21, Moody’s upgraded the tech giant’s long-term credit rating to the highest ‘AAA’ with a stable outlook, according to Reuters.

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Following the news, Apple shares, which is one of the leading FAANG stocks, gained 1.9% on December 21 to close at $172.99.

Moody’s upgrade was driven by Apple’s “exceptional liquidity” and strong earnings. In fiscal 2021, Apple reported impressive earnings that grew around 65%, as well as strong revenue growth of 33% driven by robust demand for its products and services.

Moody Comments

Moody’s analyst Raj Joshi, commented, “Apple’s very strong business profile reflects its substantial operating scale, a large installed base of products and users of its services, strong customer loyalty, and premium brand positioning”. He further expects Apple’s earnings to continue its growth trajectory over the next two to three years.

However, Moody’s cautioned about certain execution risks faced by Apple including short product cycles, changing consumer preferences, and synchronizing the supply chain with regular product upgrades.

In October 2021, Apple revealed that it suffered due to continuing supply chain issues, which cost the company $6 billion in sales . Furthermore, the company mentioned that the impact could heighten during the holiday season.

Analysts Recommendation

On December 13, BofA Global Research analyst Wamsi Mohan upgraded Apple to Buy from Hold, and also increased the price target on the stock to $210 (21.4% upside potential) from $160.

The rating upgrade was driven by the analyst’s optimism on the expected arrival of an AR/VR headset.

Mohan stated, “We view this technology as a game-changer as it will enable many new applications, which will require high performance hardware and higher access speeds.”

Consensus among analysts is a Strong Buy based on 21 Buys, 4 Holds, and 1 Sell. At the time of writing, the average Apple stock price prediction was $174.08, which implies that the shares are fairly valued at the current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 89% Bullish on Apple stock, compared to a sector average of 70%.