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On Thursday, Morgan Stanley (NYSE:MS) analysts reiterated an Overweight rating and maintained a $235.00 price target on Apple stock (NASDAQ: NASDAQ:AAPL), representing a 16% upside from current levels. According to InvestingPro analysis, Apple is currently trading above its Fair Value, with the stock showing a "GOOD" overall financial health score. The decision follows notable growth in the company’s App Store revenue.
The analysts highlighted that the U.S. App Store experienced a 10% year-over-year growth in May, an acceleration from the 8% growth observed in April. Revenue per download also increased by 5% year-over-year, marking a 3-point acceleration from the previous month. This performance has exceeded Morgan Stanley’s forecasts by 1.5 percentage points. This growth contributes to Apple’s impressive $400.4 billion in revenue over the last twelve months, with a healthy gross profit margin of 47%.
According to the analysts, this performance could imply an approximate $110 million upside in Apple’s June quarter services revenue if the current trends continue. Despite this positive trend, the firm’s May 2025 AlphaWise Survey indicated that 28% of U.S. iPhone users are "extremely likely" to bypass the App Store’s in-app purchases, a figure consistent with a 2022 survey.
The analysts noted that if these survey results were to materialize, there could be potential risks to 10% of App Store revenue, 3% of services revenue, and 2% of Apple’s earnings per share. Upcoming events for Apple include the Worldwide Developers Conference on June 9th and ongoing tracking of the June quarter App Store performance.
In other recent news, Apple has been the focus of several analyst updates and evaluations. Needham analysts downgraded Apple from a Buy to a Hold rating, citing concerns over valuation and competitive pressures. They noted that Apple’s forward P/E ratio for 2026 is high and suggested that a stock price between $170 and $180 might be more appealing. Meanwhile, Evercore ISI reiterated an Outperform rating with a $250 price target, highlighting strong App Store growth, which saw a 13% increase in May. They also mentioned that Apple’s strategy to focus on smaller on-device AI models could avoid the high costs associated with large-scale AI investments.
TD Cowen maintained a Buy rating with a $275 target, expressing optimism about Apple’s potential in generative AI. The analysts emphasized that Apple’s revenue and cost structure provide an advantage, although they acknowledged potential risks if AI strategies are not effectively executed. JPMorgan also maintained an Overweight rating with a $240 price target, expecting incremental AI advancements at the Worldwide Developers Conference (WWDC).
The analysts believe that the conference will feature expanded AI capabilities, although Apple still trails other tech giants in this area. Overall, the recent analyst updates reflect a mix of cautious optimism and concern over Apple’s valuation and competitive landscape.
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