Apple stock outlook: ‘I see no way that it can expand its multiple’

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Apple Inc (NASDAQ: AAPL) stock slid 2.0% in recent hours after Foxconn – one of its largest supplier had to suspend production as a new wave of COVID infections pushed Shenzhen (China) into a fresh lockdown.  

Apple stock to underperform the S&P 500

In a rising rate environment, Cerity Partners’ Jim Lebenthal sees cyclicals as a better pick than Apple. On CNBC’s “Halftime Report”, he said:

I don’t think Apple is the key to the market. I see no way that it can expand its multiple in a regime where the interest rates are slowly going to rise. If that’s the case, its share price growth for the next 12 months will be equal to its EPS growth. That’s anywhere between 8.0% and 12%.

Clearly, he still sees upside in the Apple stock but is convinced that the broader market will outperform AAPL.

Apple announced new products last week

Lebenthal’s remarks come a week after Apple launched several new products, including a budget, 5G compatible iPhone SE.

Even within the tech space, he’s convinced that Qualcomm could do better than Apple as Fed kickstarts the rate hike cycle with a 25 basis points increase this week.

Inflation climbed to a fresh 40-year high of 7.9% in February. Still, many anticipate the central bank to be less hawkish this year than previously indicated on fears of the global economic fallout related to the ongoing war in Ukraine.

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