On Monday, Itau BBA maintained its underperform rating on Apple Inc. (NASDAQ:AAPL) with a steady price target of $162.00. The decision follows the release of IDC's recent figures, indicating that Apple's actual volumes for the first quarter of 2024 were 3% below the Bloomberg sell-side consensus of 51.7 million units and 2.2% below Itau BBA's own estimates.
The report suggests that these numbers reflect a continued weakness in Apple's market momentum. According to Itau BBA, the underperformance underscores the need for Apple to introduce an AI-enhanced iPhone. The firm points out that Samsung (KS:005930)'s edge over Apple could be partly attributed to its integration of more AI features, which may be influencing some customers to switch brands.
Itau BBA notes that while there is strong confidence in Apple's development of an AI iPhone, the pressure is on for the tech giant to release it sooner rather than later. The anticipation for such a product is high, and the market is expected to react positively to an announcement, potentially at the Worldwide Developers Conference (WWDC) in June.
The stock's recent outperformance on the previous Thursday and Friday was linked to news about Apple's development of an AI chip for Macs, which seems to support the market's eagerness for AI advancements from the company. Despite this, Itau BBA remains cautious about the timing of any new AI iPhone release and has chosen to maintain its underperform rating for the time being.
InvestingPro Insights
InvestingPro data shows that Apple Inc. (NASDAQ:AAPL) has a formidable market cap of $2.68 trillion and a Price/Earnings (P/E) ratio of 26.79, which is slightly adjusted to 26.53 for the last twelve months as of Q1 2024. Despite the slight revenue decline of 0.47% over the last twelve months, the company's gross profit margin remains healthy at 45.03%, reflecting its strong pricing power and operational efficiency.
Moreover, Apple's commitment to shareholder returns is evident with a 4.35% growth in dividends and a consistent history of dividend payments over the past 13 years, as highlighted by two InvestingPro Tips.
InvestingPro Tips also suggest Apple's stock trades with low price volatility and operates with a moderate level of debt, which may be reassuring for investors concerned about market fluctuations and financial stability. It's worth noting that the stock is currently trading near its 52-week low, which could present a potential entry point for investors.
For those looking for more insights, InvestingPro offers several additional tips on Apple, which can be accessed through InvestingPro's comprehensive platform. Use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription for even deeper analysis and data.
As Apple approaches its next earnings date on May 2, 2024, and with the anticipation of AI-enhanced products, these financial metrics and InvestingPro Tips may help investors gauge the potential impact of new releases on the company's financial health and stock performance.
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