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On Monday, Phillip Securities adjusted its outlook on Apple Inc. (NASDAQ:AAPL), with analyst Helena Wang setting a new price target of $200, down from the previous $235. The firm maintained a Neutral rating on the stock. The revision reflects concerns over increased costs and investment in U.S. operations, as well as challenges in the China market. According to InvestingPro data, 21 analysts have recently revised their earnings expectations downward, with analyst targets ranging from $170 to $300, suggesting mixed sentiment about the tech giant’s near-term prospects.
Wang cited rising tariffs as a key factor necessitating a reduction in profit after tax and minority interest (PATMI) estimates for fiscal years 2025 and 2026, with a 2% decrease for FY25e and a 4% decrease for FY26e. This anticipated impact on gross margins has prompted a reassessment of Apple’s financial outlook. Despite these concerns, InvestingPro analysis shows Apple maintains a GOOD overall financial health score, with particularly strong profitability metrics and a robust gross profit margin of 46.6%.
In addition to tariff-related adjustments, Phillip Securities has recalibrated its capital expenditure (CAPEX) projections for Apple. The firm now expects CAPEX to rise by 1.2 times in FY25e and 2.3 times in FY26e, indicating a significant increase in the company’s investment in its U.S. operations.
Despite these changes, the analyst has kept the weighted average cost of capital (WACC) at 6.5% and the terminal growth rate at 3%, unchanged from previous estimates. These figures play a crucial role in determining the discounted cash flow (DCF) target price, which has been revised to reflect the updated expectations.
The report underscores a cautious stance on Apple’s near-term prospects. Wang points to the combination of higher tariffs, elevated capital expenditures, and ongoing weakness in product sales and performance in the China market as factors that could pose challenges for the tech giant moving forward. Trading at a P/E ratio of 32x and showing elevated valuation multiples across key metrics, InvestingPro analysis suggests the stock is currently overvalued. Discover more insights and 12 additional ProTips about Apple’s financial health, valuation, and growth prospects with an InvestingPro subscription, including access to comprehensive Pro Research Reports covering 1,400+ top stocks.
In other recent news, Apple Inc. reported its March quarter earnings, with revenues, net profit, and earnings per share each growing by 5%, 5%, and 8%, respectively, meeting consensus estimates. The company anticipates revenue growth in the low to mid-single digits for the upcoming June quarter, although this is slightly below some analysts’ expectations. Apple has been dealing with tariff-related cost pressures, expecting a $900 million increase in the cost of goods sold, which could impact its gross margins. Analyst firms have varied in their assessments, with Jefferies downgrading Apple to an Underperform rating, citing concerns over gross margin pressures and potential tariff impacts. Conversely, Citi maintained a Buy rating, highlighting strong sales in iPhones and Macs, despite challenges in the Wearables segment. UBS kept a Neutral rating, noting the lack of detailed segment guidance and potential iPhone revenue decline. Additionally, Rosenblatt downgraded Apple to Neutral, citing the need for innovative products to drive growth amid current market conditions. In a strategic move, Apple is partnering with Anthropic to develop AI-powered software to enhance its coding platform, reflecting its continued focus on leveraging AI technology.
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