On Monday, Jefferies maintained its Hold rating on Apple Inc. (NASDAQ:AAPL) with a steady price target of $212.92. The firm noted that delivery lead times for Apple's iPhone 16 Pro (P) and iPhone 16 Pro Max (PM) have significantly shortened in most markets, with availability now widespread except in Japan. This observation suggests that the demand, which may not be as robust as anticipated, is being adequately met by the current supply.
According to recent checks, Apple has reduced its production orders for the iPhone 16 by 4 million to 5 million units for the fourth quarter of 2024, mainly affecting the non-Pro models. Consequently, the production target for the second half of 2024 has been adjusted down from the initial estimate of 88-89 million units to 83-85 million units. This revised forecast aligns closely with the production of 85 million units in the second half of 2023.
The sales for the iPhone 16 Pro and Pro Max models appear to be on target, but not exceeding expectations, as there has been no increase in production orders in Apple's first adjustment for the period. Despite this, the analyst expects the mix of Pro and Pro Max models in the iPhone 16 lineup to continue to increase, particularly in the initial weeks following the launch, contrasting with the slower start for last year's iPhone 15 Pro Max due to production yield issues.
Looking ahead to the fourth quarter of 2024, the mix is projected to normalize compared to the initial launch period, yet it is anticipated to show a year-over-year increase. Over the iPhone 16's lifecycle, the mix of Pro and Pro Max models is estimated to grow to 58%, up from 55% for the iPhone 15.
In other recent news, Apple Inc. has introduced its new iMac, featuring an M4 chip and Apple Intelligence, offering enhanced performance and AI capabilities. The technology giant also launched a suite of AI features, known as Apple Intelligence, for its iPhone, iPad, and Mac devices, aiming to expedite and simplify everyday tasks. JPMorgan has maintained an Overweight rating on Apple's shares, predicting stronger-than-expected fourth-quarter results and a weaker first quarter for 2025, with the introduction of Apple Intelligence expected to boost demand and lead to revenue outperformance in the second and third quarters of 2025.
In legal matters, Apple recently secured a victory in a patent case against Masimo (NASDAQ:MASI) Corporation, with a jury ruling that Masimo's W1 and Freedom smartwatches, along with their chargers, infringed on two of Apple's design patents. However, the jury determined that Masimo's current smartwatch models do not infringe on Apple's patents.
InvestingPro Insights
As we consider Jefferies' Hold rating on Apple Inc. (NASDAQ:AAPL) and the production adjustments for the iPhone 16, it's worth examining some key financial metrics and insights from InvestingPro.
Apple's market capitalization stands at an impressive $3.55 trillion, reflecting its dominant position in the technology sector. The company's P/E ratio of 35.44 suggests that investors are willing to pay a premium for Apple's earnings, which aligns with the InvestingPro Tip indicating that Apple is "trading at a high earnings multiple."
Another relevant InvestingPro Tip highlights that Apple has "maintained dividend payments for 13 consecutive years," demonstrating the company's commitment to returning value to shareholders even as it navigates fluctuations in product demand. This consistent dividend policy could provide some stability for investors amidst the reported production adjustments.
It's also noteworthy that Apple's revenue for the last twelve months as of Q3 2024 was $385.6 billion, with a modest revenue growth of 0.43%. This relatively flat growth rate may be reflected in the company's decision to adjust iPhone production targets, as mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Apple, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.