Citi has reaffirmed its positive stance on Apple Inc. (NASDAQ: NASDAQ:AAPL) shares, maintaining a Buy rating and a $255.00 price target.
The firm's analysis led to an update in iPhone unit forecasts for the September and December quarters, with a reduction of 2 million units each, setting the expectation for 83 million iPhone 16 units this year.
Conversely, the March and June quarter estimates for 2025 were increased by 4 million and 7 million units, respectively.
Citi now projects that the calendar year 2024 and 2025 iPhone unit sales will reach 224 million and 246 million, translating to a 3% decrease and a 9% increase year-over-year.
The anticipated release of Apple Intelligence in the United States later in October and a significant update to Siri in the following year are seen as key factors that could influence consumer decisions on upgrading their devices.
Adjustments were also made to the firm's financial year estimates for 2024, 2025, and 2026, with changes of -9%, +1%, and 0% respectively, while the Buy rating and the $255 price target were reiterated.
In other recent news, Apple is facing potential supply chain disruptions due to a fire at a Tata Group facility in Tamil Nadu, which has halted the production of iPhone components. Counterpoint Research suggests this incident could lead to a 10-15% drop in the production of older iPhone models in India.
The affected plant, a critical supplier for Foxconn and Apple's own assembly operations in India, had been exporting iPhones and parts worth over $250 million to various countries.
Apple has also exited negotiations to invest in an OpenAI funding round expected to generate approximately $6.5 billion. Other major tech firms, including Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA), continue to participate in the discussions. The funding round, which is anticipated to conclude soon, has attracted significant attention due to the potential valuation of AI innovator OpenAI at over $100 billion.
In analyst news, Evercore ISI has maintained an Outperform rating for Apple, alongside a steady target price of $250. The firm's analysis focused on the iPhone 16 and 16 Pro models, noting a decrease in delivery windows for the standard versions.
Despite a mixed picture in the Chinese market where Apple saw a year-over-year decline in shipments, Evercore ISI has maintained its positive stance on Apple. Other firms' ratings on Apple have varied, with BofA Securities retaining a Buy rating, Barclays reiterating an underweight rating, and Goldman Sachs maintaining a Buy rating.
InvestingPro Insights
To complement Citi's analysis on Apple Inc. (NASDAQ:AAPL), recent data from InvestingPro offers additional context for investors. Apple's market capitalization stands at an impressive $3.45 trillion, reflecting its dominant position in the technology sector. The company's P/E ratio of 35.06 indicates that investors are willing to pay a premium for Apple's earnings, aligning with Citi's bullish outlook.
InvestingPro Tips highlight that Apple has raised its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This could be particularly appealing to investors looking for stable income alongside potential capital appreciation. Additionally, Apple is noted for generally trading with low price volatility, which may provide some reassurance to investors in light of the projected fluctuations in iPhone unit sales.
The company's strong financial position is further underscored by its ability to cover interest payments with its cash flows, suggesting financial stability as it navigates the anticipated shifts in iPhone demand and the rollout of new features like Apple Intelligence.
For readers interested in a more comprehensive analysis, InvestingPro offers 14 additional tips that could provide valuable insights into Apple's investment potential.
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