Apple (AAPL) has tested the patience of its many ardent fans on Wall Street this year.
Shares of the iPhone, iPad and Mac maker have gained just 2 percent since January, underperforming other tech heavyweights such as Google (GOOG), Facebook (FB) and Amazon (AMZN), which each have surged by double-digits during that same period.
The reason for the Cupertino, California-based company's struggles can be summed up in one word: China. The world's most populous country is far more important for Apple than it is for those other tech giants, according to analysts. Concerns about a slowing Chinese economy have also contributed to the overall stock market's recent volatility that experts have said shows no signs of ending.
"You also have to take a wait-and-see approach because there's a lot going on in the smartphone space," Angelo Zino, an analyst with S&P Equity Markets who rates the shares as a "buy," told CBS MoneyWatch. "If you look at demand for smartphones in the first half of the year out in China, it was down year-over-year, so you have to wonder how saturated the market is. There's a lot of question marks when it comes to Apple."
Apple sold about 75 million iPhone 6 and iPhone 6 Plus in 2014's fourth quarter, a level that could be hard to maintain this year. Furthermore, Wednesday's much-hyped Apple product announcements, such as new iPhones with faster processors and improved cameras and the largest-ever iPads, didn't have enough of a wow factor to convince Wall Street that the time is right to buy Apple's stock.
Regarding the stock's roughly 2 percent drop on Wednesday, "we think it was tied to the broader market sell-off," said Brian Colello, an analyst with Morningstar, in an interview with CBS MoneyWatch. Colello estimates the stock's fair value at $140, above where it currently trades ($112.57 at Thursday's close). "There are some concerns from investors that maybe Apple won't grow its iPhone revenue this year. Those concerns have weighed on the stock price."
Colello, however, expects robust iPhone growth amid strong demand for the larger-screen iPhone 6 and iPhone 6 Plus. Sales in China will expand, although he reminded clients in a note that "the health of China's true economy remains the biggest risk to Apple's near-term growth, in our view."
Of course, China isn't the only question mark for Apple. Among others is the iPad. Demand for the tablet computer has been declining in recent quarters. So, Apple is trying to breathe new life into it by adding an iPad Pro model with a 12.9-inch screen in an effort to appeal to business customers. Apple has even included a stylus -- dubbed the Apple Pencil -- a feature the late Steve Jobs famously considered useless. It also will have a keyboard similar to the Microsoft (MSFT) Surface tablet.
"The iPad Pro's $799 price, plus the stylus and keyboard, push the cost to nearly $1,100," wrote Nomura Securities analyst Jeffrey Kvaal, who rates Apple as a "buy," in a note to clients. "A similarly equipped Surface is $830. ... This suggests some risk that the iPad Pro will eat into MacBook sales." He thinks some consumers may trade up from a MacBook Air or down from a MacBook Pro.
S&P's Zino, for one, argues that most consumers will choose the MacBook over the iPad Pro, though other analysts, such as Colello, see things differently. They note that enterprise customers can be more profitable for tech companies than individuals.
Looking ahead, some investors are waiting to see how Apple's revamped Apple TV fares. The company unveiled some updated features such as a new remote control and user interface. Apple is expected to unveil a streaming video service at a future date.
"We're still not sold on Apple emerging as a dominant TV platform, given high fragmentation in this market," Colello said in a note to clients. "But like many of Apple's services, to the extent that customers gravitate to, and invest in, Apple TV, such loyal customers are more than likely to pay premium prices for iPhones and other Apple hardware products well into the future."