On Friday, BofA Securities maintained its Buy rating on Apple Inc. (NASDAQ:AAPL) with a steadfast price target of $256.00.
The firm's analysis anticipates a slight outperformance for Apple's fourth fiscal quarter of 2024 results and projects a more optimistic guidance for the December quarter. The assessment foresees an increase in iPhone demand following the late October introduction of Apple Intelligence. The integration of ChatGPT in the iOS 18.2 Beta is reported to be compelling based on preliminary feedback.
The analyst expects the consensus on Apple's Services revenue and overall gross margins for the December quarter to be underestimated. Even if iPhone sales show some weakness, it is predicted that the higher gross margins will balance out any potential negative impact on earnings per share.
The recommendation to maintain a Buy rating is supported by several factors, including a multi-year iPhone upgrade cycle, favorable gross margin trends, and strong free cash flow.
Apple is scheduled to report its F4Q24 earnings after the market closes on Thursday, October 31, 2024. The firm's commentary suggests confidence in Apple's performance, particularly with the staggered launch of Apple Intelligence poised to boost iPhone sales post-release. The integration of cutting-edge features like ChatGPT is also expected to enhance the appeal of Apple's offerings.
The report also implies that Apple's financial metrics, particularly the Services revenue and gross margins, may be stronger than the market consensus for the December quarter. This could lead to minimal adjustments in earnings projections if any are needed at all.
In conclusion, BofA Securities reiterates its positive stance on Apple's stock, highlighting the potential for a sustained iPhone upgrade cycle, improvements in gross margins, and a robust generation of free cash flow as key drivers for the company's continued success.
In other recent news, Apple has been navigating a series of developments. The company experienced a slight decrease of 0.3% in its iPhone sales in China for the third quarter of 2024, while rival Huawei saw a significant surge of 42%. Apple's market share now stands at 15.6%, a decrease of 0.5 percentage points from the previous year.
UBS reaffirmed its neutral stance on Apple, maintaining a price target of $236.00, and projected that Apple's revenue and earnings per share for September would likely meet their expectations.
Furthermore, Apple and Goldman Sachs were fined $89 million by the U.S. Consumer Financial Protection Bureau for violations in their joint credit card venture. The violations involved mishandling of customer transactions and misleading information about interest-free purchases. Goldman Sachs will pay a $45 million penalty and $19.8 million for consumer redress, while Apple will incur a $25 million fine.
Additionally, Apple has reportedly reduced production of its Vision Pro mixed reality headset due to slow sales, primarily due to high costs and increased competition. The company may halt production of the current model by the end of the year.
These are the recent developments surrounding the tech giant.
InvestingPro Insights
To complement BofA Securities' bullish outlook on Apple Inc. (NASDAQ:AAPL), recent data from InvestingPro provides additional context to the company's financial position. Apple's market capitalization stands at an impressive $3.51 trillion, underscoring its position as a dominant player in the technology sector. This aligns with the InvestingPro Tip highlighting Apple as a "prominent player in the Technology Hardware, Storage & Peripherals industry."
The company's P/E ratio of 34.93 indicates that investors are willing to pay a premium for Apple's earnings, which is consistent with BofA's optimistic projections. This high valuation multiple is further supported by Apple's strong financial performance, with a reported revenue of $385.6 billion in the last twelve months as of Q3 2024 and an EBITDA of $131.78 billion for the same period.
An InvestingPro Tip notes that Apple "has raised its dividend for 12 consecutive years," which speaks to the company's consistent financial health and shareholder-friendly policies. This track record of dividend growth, coupled with a current dividend yield of 0.43%, may contribute to the stock's appeal for long-term investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 16 additional tips on Apple, providing a deeper dive into 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.