There are better tech plays than Apple at the moment, according to Rosenblatt Securities analyst Barton Crockett. Crockett advised investors to look beyond Apple towards opportunities with higher growth and margin potential. The analyst has a hold rating on the stock and assigned shares a $198 price target, implying a 13.8% upside from Thursday’s close. “I think you’ve got to be careful,” Crockett said Friday about Apple on “Squawk on the Street.” “Without the great kind of earnings revenue reset that we see at some other companies, and with interest rates higher, which I think is a headwind for the multiple, it’s hard to say that this stock is going to be an outperformer like it has been going forward.” Crockett noted that while Apple’s stock has performed well this year, it has been propelled mainly by multiple expansion. Specifically, he noted the at Apple’s price-to-earnings valuation has risen to about 1.5 times that of the S & P 500’s — which he said is a peak on an absolute and relative basis. “It’s hard to say that you want to bank on more of that from here,” Crockett said. Major tech stocks have dragged the market down this quarter. The tech-heavy Nasdaq Composite is also set to close out a third consecutive losing week for the first time since December. Shares of Apple are down 10% this quarter, making them the second-biggest laggard in the Dow Jones Industrial Average during that time. Big Tech peers Meta and Microsoft have also struggled since the end of June. Nvidia, meanwhile, is up more than 1% during the third quarter but has slid 9% in the past month. Still, Crockett thinks these other Big Tech names look more attractive than Apple moving forward. The analyst said that unlike Apple, companies like Facebook-parent Meta, Amazon and Pinterest are stocks that are showing meaningful growth with margin improvement and a great top line. He added that consumers are continuing to spend, which is helpful for retailers like Amazon, and that cloud services are also getting a boost from advances in artificial intelligence. To be sure, Crockett still views Apple as a premium consumer products company that people will flock to when times are tough. The continued resilience of the U.S. economy just doesn’t help that case, however. “If we were to go into an environment where the macro is less healthy and growth is harder to come by, maybe playing tighter to those names that are just kind of comfort food, like an Apple, but today we don’t see that,” he said. “Today we’re seeing margin and growth opportunities that are more interesting in this space.”
It may be tough for Apple to outperform from here, says top tech analyst