On Tuesday, Citi updated its outlook on Apple Inc. (NASDAQ:AAPL), raising the price target to $132 from the previous $118.50, while keeping a Buy rating on the shares. The adjustment reflects the firm's positive view on the company's performance and future prospects.
The analyst noted that Apple's shares have seen a robust year-to-date increase of 31% due to strong first-half trading and a shift into defensive stocks through the second and third quarters.
Despite anticipating another quarter of solid growth for High-Temperature Units (HTUs) and Zyn, with expected increases of 9% and 35% respectively, and a slight 1.5% volume decline in Combustibles, the analyst suggests the stock may stabilize as it approaches the third-quarter financial report.
Citi projects that Apple is on a clear path to meet its full-year 2024 earnings guidance and speculates that the company could slightly raise its adjusted earnings per share (EPS) forecast to a range of $6.38 to $6.50. The revised price target of $132 is based on a combination of discounted cash flow and price-to-earnings methodology.
The analyst has adjusted the full-year EPS estimates up by 1% to account for favorable foreign exchange movements. The continued endorsement of a Buy rating is based on the belief that Apple will persist in delivering on its compelling growth model.
In other recent news, Apple Inc. has been downgraded from a Buy to a Hold rating by global investment banking firm Jefferies, citing concerns about the upcoming iPhone's capabilities in artificial intelligence (AI). The firm predicts that significant advancements in AI won't be seen until around 2026 or 2027. Despite this, Apple's iPhone remains central to its business model, contributing to 52% of the company's fiscal year 2023 revenue.
Meanwhile, Evercore ISI maintained its Outperform rating for Apple, citing stable demand for the new iPhone 16 and 16 Pro models and a 14% growth in App Store revenues.
Mizuho analysts suggest that Apple's focus on AI services could drive demand for various iPhone 16 components, potentially influencing the value chain. BofA Securities, maintaining its Buy rating on Apple, suggested that the initial demand for new iPhone models may surge once AI features become available.
InvestingPro Insights
Apple's strong market position and financial performance are reflected in recent InvestingPro data. The company boasts a substantial market capitalization of $3.37 trillion, underscoring its status as one of the world's most valuable companies. Apple's revenue for the last twelve months as of Q3 2024 stood at $385.6 billion, with a gross profit margin of 45.96%, highlighting its ability to maintain profitability in a competitive market.
InvestingPro Tips provide additional context to Citi's bullish outlook. One tip notes that Apple "has raised its dividend for 12 consecutive years," demonstrating a commitment to shareholder returns that aligns with the company's strong financial position. Another tip indicates that Apple is "trading near its 52-week high," which corroborates Citi's observation of the stock's robust year-to-date performance.
It's worth noting that InvestingPro offers 13 additional tips for Apple, providing investors with a comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable for investors looking to make informed decisions in light of Citi's updated price target and the upcoming third-quarter financial report.
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