On Friday, Bernstein analyst from SocGen Group adjusted the price target for Apple Inc. (NASDAQ:AAPL) shares, lifting it from $240 to $260, while continuing to recommend the stock as Outperform.
The analyst’s evaluation of Apple highlights the company as a "quality compounder," citing factors such as mid-single digit revenue growth, improving margins, disciplined capital returns, and anticipated double-digit earnings per share (EPS) growth. According to InvestingPro data, Apple currently trades at a P/E ratio of 39.8x and is trading near its 52-week high of $260.1, suggesting the stock may be overvalued relative to its Fair Value.
Apple’s robust position is attributed to its status as a platform company, with an impressive reach of over 2.3 billion devices and nearly 1 billion unique users, who are considered demographically attractive. With annual revenue of $391 billion and an impressive market capitalization of $3.69 trillion, Apple maintains its position as a prominent player in the Technology Hardware sector. The analyst’s statement points out the company’s strengths but also notes that Apple’s current valuation is at a relative peak. Additionally, there is an acknowledgment of a distinct seasonal trading pattern in Apple’s stock and a cautious outlook on the iPhone 16 cycle, which could potentially underperform expectations.
The recommendation suggests that investors consider increasing their positions in Apple stock if the price drops to $220 or below, or during the period from February to April. According to the analyst, a solid foundation for Apple’s stock would be an EPS of $9 in the fiscal year 2026, combined with a multiple of 32x to 33x, which would result in a share price exceeding $290. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with particularly strong profitability metrics.
The revised price target reflects an optimistic view of Apple’s future performance, despite the cautionary note regarding the potential tepid response to the upcoming iPhone 16 cycle. The analysis by Bernstein provides a perspective on the company’s financial health and growth prospects, underlining Apple’s significant presence and influence in the technology sector.
For a deeper understanding of Apple’s valuation and growth potential, InvestingPro subscribers can access comprehensive research reports with over 30 key metrics and expert analysis available for over 1,400 US stocks.
In other recent news, Apple has settled a Siri privacy lawsuit for $95 million, pending approval from U.S. District Judge Jeffrey White. This settlement is a response to allegations that Siri, Apple’s voice-activated assistant, violated user privacy by unintentionally recording private conversations and disclosing them to third parties. Meanwhile, UBS has moderated its outlook on Apple, citing weaker iPhone sales which prompted a downward revision of iPhone unit and revenue forecasts for the December quarter. Despite this, UBS maintained a neutral stance on Apple’s shares.
On another note, Wedbush Securities has increased its price target on Apple shares (NASDAQ:AAPL), maintaining an Outperform rating. The firm cited the onset of a "golden era of growth" for Apple, propelled by advancements in artificial intelligence (AI). Wedbush believes that Apple’s AI strategy will significantly alter the company’s growth narrative in the years to come, potentially opening up a new multi-billion dollar annual revenue stream in the Services sector.
In addition, Apple has expressed interest in participating in Google (NASDAQ:GOOGL)’s forthcoming U.S. antitrust trial concerning online search, citing concerns over revenue-sharing contracts that yielded an estimated $20 billion in 2022. Finally, Apple’s biggest smartphone rival in China, Huawei, reduced the prices of its high-end devices during a "Super Brand Day" promotion on JD (NASDAQ:JD).com.
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