Apple Inc AAPL beat analysts’ fourth-quarter revenue and earnings estimates, but guidance that came in below estimates has analysts questioning the future outlook after Thursday’s report.
The Apple Analysts:
- Bank of America analyst Wamsi Mohan reiterated a Buy rating on Apple with a $256 price target.
- Goldman Sachs analyst Michael Ng maintained a Buy rating and raised the price target from $275 to $286.
- Wedbush analyst Daniel Ives maintained an Outperform rating with a $300 price target.
- KeyBanc analyst Brandon Nispel reiterated an Underweight rating with a $200 price target.
- Piper Sandler analyst Matt Farrell reiterated a Neutral rating with a $225 price target.
- Needham analyst Laura Martin maintained a Buy rating with a $260 price target.
Bank of America on AAPL: A fourth-quarter beat by Apple may have been overshadowed by weaker, and potentially conservative revenue guidance, Mohan said in a new investor note.
"We see the potential for higher GMs (gross margins) in F25 and think it is too early to determine the trajectory of the iPhone 16 cycle," Mohan said.
The analyst said the launch of Apple Intelligence creates a "product refresh cycle" that is different from past years. The new features, which are only available on the installed base, could lead to more new product purchases over time.
Goldman Sachs on AAPL: The company's iPhone segment helped offset a miss in Services estimates in the fourth quarter, Ng said in a new investor note.
"In our view, AAPL's results and F1Q25E guidance was better-than-feared, given several media reports about iPhone build cuts and negative smartphone supply chain read-throughs," Ng said.
The analyst said there could be another "step-up" in iPhone sales going forward after the strength shown in the fourth quarter and the upcoming Apple Intelligence features.
Apple's investments and focus on the iPhone 16 supply chain could help with market share gains globally and be the reason why the smartphone had shorter lead times, Ng added.
The analyst said Services could benefit from the growing installed base and increased customer engagement for Apple products.
"Valuation is attractive relative to AAPL's historical multiple – both on an absolute & relative basis – and compared to key tech peers."
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Wedbush on AAPL: The iPhone story remains strong and artificial intelligence efforts could improve the upgrade cycle, Ives said in a new investor note.
The analyst said the iPhone upgrade cycle is showing success, with a strong September quarter and a large percentage of customers paying for premium models of the smartphone.
"Overall, the quarter was better than feared given all the negative bear noise and importantly iPhone revenue was a major ‘prove me' quarter for Cook & Co. in our view," Ives said of Apple and CEO Tim Cook.
Ives called the Services segment growth of 12% "impressive" and said this business has a $100 billion annual run rate and could be worth "roughly $2 trillion in valuation alone."
The rollout of Apple Intelligence in steps could help with a strong December quarter and also flow into the March and June quarters, Ives said.
"This was a rock solid quarter for Apple and the iPhone 16 launch appears be off to a very good start."
KeyBanc on AAPL: The first reset for Apple could be coming with weak guidance and poor results for iPad, Wearables and Services, Nispel said in a new investor note.
"We believe expectations should reset lower, which should pressure the stock as expectations seem far too high looking out to ‘25/'26," Nispel said.
The analyst said Apple will likely see revenue growth in the low-single digits to mid-single digits, not the high-single digits that other analysts predict.
The analyst added that Apple’s headwinds include a slower upgrade cycle, iPhone SE cannibalizing iPhone 16, too-high expectations and a premium stock valuation.
"Apple is an impressive business with what we believe are unrealistic expectations to reaccelerate growth across all product categories and geographies."
Piper Sandler on AAPL: Guidance below consensus estimates overshadowed the fourth-quarter results, Farrell said in a new investor note.
"We believe the guidance implies product revenue will be up slightly year-over-year in the quarter, suggesting that iPhone revenue growth will remain muted," Farrell said.
The analyst said iPhone demand could be limited in future quarters unless Apple Intelligence drives higher demand.
Needham on AAPL: Fourth-quarter revenue growth of 6% was one of the lowest for Apple and its peers, Martin said in a new investor note.
The analyst said the report was "in stark contrast" to peers like Alphabet, Meta Platforms and Amazon, who all saw GenAI lower cost growth and accelerate revenue growth.
"AAPL's mental constraint is that it views time in 1-year product cycles, whereas the GenAI war is collapsing time frames into months," Martin said.
Apple could be 12 months behind Alphabet and Microsoft in GenAI, according to investors, Martin added.
AAPL Price Action: Apple stock is down 1.5% to $222.35 on Friday, versus a 52-week trading range of $164.08 to $237.49. Apple stock is up 20.7% year-to-date in 2024.
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