On Monday, Goldman Sachs initiated coverage of Apple (AAPL) with a buy rating and a price target of $199. The investment bank's analyst, Michael Ng, focused on Apple's huge customer base and ecosystem as an engine of growth.
Ng believes Apple's high degree of brand loyalty among consumers, combined with continued growth in services, should offset any potential slowdown in sales of iPhones and other products.
Do Apple's technicals agree with Goldman Sachs' analysis? Let's go to the charts to find out.
Over the past three months, Apple has formed a cup-and-handle pattern (black curved lines). This bullish formation projects the stock to the $185 area.
Source: TradeStation
Apple is trading above its 50-day (blue) and 200-day (red) moving averages. The 50-day MA is rising, increasing the potential for a bullish moving average crossover.
On Monday, Apple's volume reached its highest level in over a month (black arrow), but the stock hasn't broken out yet. The stock needs a catalyst to push it above $157 (green dotted line), a price Apple has failed to surpass on several occasions (green arrows).
Regarding the Goldman Sachs upgrade, Ng isn't wrong about Apple's customer base and ecosystem, but there might be more to this story.
Apple is known for innovation. Nearly six years ago, I wrote about what I believe could become the company's greatest innovation.
In 2017, reports were circulating that Apple was hiring biomedical engineers with a goal to develop sensors that could monitor blood sugar levels without piercing skin. Eventually, the sensors could be combined with Apple's Watch or used to create a separate wearable medical device.
After years of silence, reports are again circulating about the project. It's now reported that Apple has made significant progress but still has work to do before a wearable glucose monitor can become a reality.
Why is this project so important? According to the Centers for Disease Control, 37.3 million Americans, or about one in 10, have diabetes. That figure jumps globally to 422 million, according to the World Health Organization. About 1.5 million deaths per year are directly attributed to diabetes.
A wearable blood monitoring device would dramatically widen Apple's already formidable user base. If this project comes to fruition and just part of its potential is realized, lives will be changed for the better and Apple shareholders will benefit for years to come.
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