BofA keeps Apple stock at Buy with $256 target, predicts rising iPhone demand By Investing.com
On Friday, BofA Securities maintained its buy rating on Apple Inc. (NASDAQ:) with a target price of $256.00.
The company's analysis expects an underperformance for Apple's fiscal fourth quarter 2024 results and projects optimistic guidance for the December quarter. This survey shows an increase in demand for the iPhone following last October's launch of Apple Intelligence. ChatGPT integration in iOS 18.2 Beta is reported to be compelling based on initial feedback.
The analyst expects consensus on Apple's Services revenue and net income for the December quarter to be underestimated. Even if iPhone sales show some weakness, higher margins are predicted to offset any potential negative impact on profits per se.
The recommendation to maintain a buy rating is supported by several factors, including the multi-year iPhone development cycle, favorable gross margin trends, and strong free cash flow.
Apple is scheduled to report its F4Q24 profit after the market closes on Thursday, October 31, 2024. The company's comments raise confidence in Apple's performance, especially with the surprising launch of Apple Intelligence that is ready to increase iPhone sales after release. The integration of advanced features like ChatGPT is expected to enhance the appeal of Apple's offerings.
The report also points out that Apple's financial metrics, particularly Services revenue and net income, may be stronger than market consensus for the December quarter. This would result in little if any adjustment to the salary estimate being needed at all.
In conclusion, BofA Securities reiterates its positive outlook on Apple stock, highlighting the strength of the iPhone development cycle, overall value development, and strong free cash flow generation as key drivers of the company's continued success.
In other recent news, Apple has been navigating a series of developments. The company saw a slight 0.3% drop in its iPhone sales in China in the third quarter of 2024, while rival Huawei saw a massive 42% increase. Apple's market share now stands at 15.6%, a decrease of 0.5 percentage points from last year.
UBS reaffirmed its neutral stance on Apple, maintaining a $236.00 target price, and predicted that Apple's revenue and earnings per share in September would likely meet their expectations.
In addition, Apple and Goldman Sachs were fined $89 million by the US Consumer Financial Protection Bureau for violations in their joint credit card business. The breach involved the mishandling of customer transactions and misleading information about interest-free purchases. Goldman Sachs will pay a $45 million fine and $19.8 million to settle the buyer, while Apple will pay a $25 million fine.
Additionally, Apple has reportedly reduced production of its Vision Pro virtual reality headset due to slow sales, primarily due to higher costs and increased competition. The company may stop production of the current model by the end of the year.
These are the latest developments surrounding the tech giant.
InvestingPro Insights
To match BofA Securities' positive outlook on Apple Inc. (NASDAQ:AAPL), the latest data from InvestingPro provides more context on the company's financial condition. Apple's market capitalization stands at an impressive $3.51 trillion, underscoring its position as a dominant player in the technology sector. This is in line with InvestingPro's tip that highlights Apple as “a dominant player in the Technology Hardware, Storage & Peripherals industry.”
The company's P/E ratio of 34.93 indicates that investors are willing to pay a premium for Apple's earnings, which is consistent with BofA's optimistic projections. This high value multiple is also supported by the strong financial performance of Apple, with a reported profit of $ 385.6 billion in the last twelve months from Q3 2024 and EBITDA of 131.78 billion in the same period.
InvestingPro Tip notes that Apple has “increased its profits for 12 consecutive years,” citing the company's consistent financial health and shareholder-friendly policies. This dividend growth record, coupled with a current dividend yield of 0.43%, may contribute to the stock's appeal for long-term investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 16 additional tips on Apple, providing a deeper dive into the company's financial health and market condition.
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