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Investing.com -- Evercore ISI removed Apple from its Tactical Outperform (TAP) list following a strong September-quarter report and upbeat December-quarter guidance.
Shares in the iPhone maker had already gained about 7.5% since being added to the list two weeks earlier, outperforming the S&P 500’s 2.6% rise over the same period.
Evercore attributed the move to successful execution around the latest iPhone refresh and accelerating Services growth.
Apple’s September quarter revenue rose 7.9% year-over-year, with Services up 15%.
But the highlight of the report was the company’s December-quarter outlook. Apple guided for revenue growth of 10–12%, driven by double-digit iPhone segment growth and low-teens Services growth.
“The iPhone revenue strength is expected to be driven by strong demand for the 17 lineup as well as some average selling price (ASP) tailwinds,” Evercore analysts led by Amit Daryanani wrote.
“Notably, AAPL has done a good job mitigating memory cost headwinds, as it was a tailwind in the Sep-qtr and it’s expected to have no impact on the Dec-qtr,” they added.
Apple also forecasted gross margins to improve sequentially. However, operating expenses are set to rise due to incremental AI initiatives.
Furthermore, the report pointed to signs of stabilization in China, with iPhone sales expected to return to year-over-year growth in fiscal Q1 after declining in fiscal Q4.
“We’re removing our tactical outperform following a strong print and guide from AAPL,” analysts concluded, adding they continue to view the stock as one of its top picks with an Outperform rating and a $300 target price.
Apple expects iPhone sales to rise by double digits in the current, holiday quarter. The forecast exceeds analyst expectations for a 9.8% increase in iPhone sales.
Chief Executive Tim Cook said the company struggled to keep up with demand for several iPhone 17 and older iPhone 16 models during the recent fiscal fourth quarter.
Apple also faced delays launching its new iPhone Air in China — its thinnest model and biggest design overhaul in years.
Cook told Reuters that the China delay was the “primary reason” sales declined there last quarter.
“However, we’re very enthusiastic about China,” he said. “We love the response to the new products there, and we expect to grow or to return to growth in Q1.”