On Thursday, UBS analysts maintained a neutral stance on Apple Inc. (NASDAQ:AAPL) shares, with a steady price target of $236.00. The tech giant, currently commanding a market capitalization of $3.79 trillion and trading near its 52-week high, shows strong financial health according to InvestingPro analysis, though current valuations suggest the stock may be overvalued.
The decision follows observations of weaker iPhone sales, prompting a downward revision of iPhone unit and revenue forecasts for the December quarter. The analysts noted a year-over-year decline of 8% in November iPhone 'sell-through', leading to an adjusted estimate of 74 million units and $67.2 million in revenue, down from the previously projected 77 million units and $69.7 million.
The revised revenue forecast for iPhone sales in December now anticipates a 4% year-over-year decrease, contrasting with earlier expectations of unchanged growth and the consensus prediction of a 2% increase. However, an almost 1% upward adjustment in the 'Services' revenue forecast was made due to stronger performance in the App Store, partially mitigating the impact of lower iPhone sales. InvestingPro data shows Apple maintaining solid fundamentals with a 46.2% gross profit margin and revenue growth of 2% over the last twelve months.
The combined effect of these revisions has resulted in a 2% reduction in the anticipated revenue for Apple's December quarter, bringing it to $120.8 billion from the initial $123.3 billion estimate. This is below the consensus expectation of $124.9 billion. Similarly, the projected earnings per share (EPS) have been lowered to $2.25 from the previous $2.31, which is also under the consensus estimate of $2.36.
The UBS analysis indicates caution due to the observed softness in iPhone sales during a typically strong sales period for the tech giant. Looking ahead, InvestingPro's comprehensive analysis, including 15+ additional ProTips and detailed financial metrics, is available through its exclusive Pro Research Report, offering deeper insights into Apple's valuation and growth prospects.
In other recent news, Huawei recently announced a significant price reduction on its high-end devices, including mobile phones, as part of a "Super Brand Day" promotion on JD (NASDAQ:JD).com. The discounts applied to a variety of products, including smartphones, headphones, watches, and tablets.
Meanwhile, Apple has been in the spotlight for several developments. Wedbush Securities has maintained an optimistic outlook on Apple, citing the potential for artificial intelligence (AI) advancements to drive growth. The firm also emphasized the importance of Apple's AI strategy, which is in the early stages of development with Apple Intelligence.
Apple has also expressed interest in participating in Google (NASDAQ:GOOGL)'s forthcoming U.S. antitrust trial concerning online search, highlighting the importance of revenue-sharing contracts that earn Apple billions of dollars annually. In another significant development, Apple is reportedly in discussions with Chinese tech giants Tencent and ByteDance to integrate their AI models into iPhones in China.
In the wake of these developments, Baidu (NASDAQ:BIDU)'s stock fell following reports of Apple's AI discussions in China. This comes as Apple seeks to bolster its declining market share in the country, where domestic brands like Huawei are offering smartphones with advanced AI capabilities.
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