Goldman Sachs maintains Apple stock buy rating, $253 target

On Wednesday, Goldman Sachs restated its Buy rating and $253.00 price target for Apple (NASDAQ:AAPL) shares, representing a potential 26% upside from the current price of $201.07. According to InvestingPro data, analyst targets for Apple range from $170.62 to $300, reflecting mixed sentiment about the tech giant’s valuation. The reaffirmation comes after the return of the popular game Fortnite to Apple’s App Store, ending nearly a five-year absence due to a court order. The new version of Fortnite allows for external payments, which circumvents Apple’s in-app purchase system and the associated platform fees.

Goldman Sachs analyst Michael Ng provided insights into the potential impact of Fortnite’s changes on Apple’s revenue, which reached $400.37 billion in the last twelve months with a healthy gross profit margin of 46.63%. According to Ng, the inclusion of both in-app purchases and external payment options on the same screen could indicate a need for user choice and might introduce friction for off-app payments. Ng also pointed out that the lack of direct discounting for external payments, coupled with indirect discounts given as Epic Rewards, might not sufficiently incentivize users to choose the external payment route over the in-app option.

The analyst also noted the absence of immediate discounts for external payments, with any incentives being provided as Epic Rewards that are deposited 14 days later. This approach could deter some users from engaging with the external payment system due to the delayed gratification.

Furthermore, Ng mentioned Apple’s ongoing legal appeal and its request to stay the contempt order that led to Fortnite’s return to the App Store. The uncertainty surrounding the appeal’s outcome and the long-term policies of the App Store could lead to a cautious approach from developers when considering the integration of external payment methods. InvestingPro analysis shows Apple maintains a strong financial health score of "GOOD" with robust profitability metrics, including a return on assets of 29.1%. Subscribers can access 13 additional ProTips and comprehensive financial analysis in the Pro Research Report, offering deeper insights into Apple’s market position and growth potential. The analyst suggested that only the most well-resourced developers might be willing to adopt such payment options given the current uncertain landscape.

Goldman Sachs’ position reflects an observation of the current situation without speculating on the future outcomes of Apple’s appeal or the broader implications for the App Store’s policies. The firm’s analysis indicates a watchful stance on how the situation unfolds and its potential effects on Apple’s revenue streams from the App Store, which contribute to the company’s position as a prominent player in the Technology Hardware, Storage & Peripherals industry.

In other recent news, Apple Inc. has announced plans to open its artificial intelligence models to third-party developers, aiming to foster innovative applications and enhance its devices. This initiative, expected to be unveiled at the Worldwide Developers Conference, will include a new software development kit and frameworks to facilitate the integration of AI features. In terms of financial analysis, Evercore ISI has maintained an Outperform rating on Apple stock, setting a price target of $250, emphasizing the significance of Apple’s Services business despite potential regulatory challenges. Meanwhile, KeyBanc Capital Markets has retained a Sector Weight rating, citing concerns over high growth expectations, competition in China, and legal issues related to the Google (NASDAQ:GOOGL) lawsuit. Additionally, Apple has blocked access to Epic Games’ "Fortnite" on iPhones globally, impacting its availability on the App Store. Furthermore, President Donald Trump expressed concerns over Apple’s production shift to India, leading to discussions with CEO Tim Cook about increasing production in the United States. These developments reflect the diverse challenges and strategic moves Apple is navigating in the current market landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.