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Investing.com -- Jefferies upgraded Apple (NASDAQ:AAPL) to Hold from Underperform and lifted its price target to $188.32 on bullish expectations for the June quarter, but warned that long-term risks persist.
The broker’s analysts believe Apple’s revenue and earnings per share (EPS) for the third quarter of fiscal 2025 (3QFY25) could beat consensus by around 5% and 9%, respectively, supported by “tariff-driven pull-in demand and share recovery in China.”
Jefferies estimates that iPhone sales in China during the recent 618 promotions grew about 19% year-over-year, helped by targeted discounts and government subsidies. The firm raised its iPhone unit estimate for the June quarter by 9% to 49.4 million, which would imply ~9% annual growth.
“This is a strong sign that AAPL is determined to defend market share in China, and Chinese consumers are still willing to buy iPhone at lower prices,” the team led by Edison Lee wrote.
However, the analysts expect iPhone unit growth to flatten in the second half of 2025. Their supply chain checks suggest iPhone 17 production volumes will remain muted, and the new model may not drive demand due to limited feature upgrades and a potentially weaker reception for the 17 Slim.
“AI is not yet a game changer,” Jefferies said, raising concerns about the Slim model’s single-camera setup, lower battery capacity, and higher price point.
“The 17 Slim model in China may also be less slim than the non-China version to accommodate the physical dual-SIM slots,” the note adds.
Despite a potentially positive June quarter, Jefferies flagged several longer-term risks that could weigh on sentiment.
The analysts view the market’s expectations around tariffs as “likely overly optimistic,” and estimate that a 10%/20%/30% tariff on imports from India, Vietnam, and China could cut Apple’s FY25–26 EPS by around 7%.
Potential downside also exists in App Store and Google (NASDAQ:GOOGL) revenue streams following regulatory developments, although "the stock could remain stable until there is more clarity on U.S. tariffs," analysts wrote.