Rosenblatt Securities has adjusted its price target for Apple Inc. (NASDAQ: NASDAQ:AAPL) shares marginally to $261 from $260 while reaffirming a Buy rating on the stock. The firm's analyst cited robust growth in the iPhone's installed base, which reached new all-time highs globally.
The iPhone has maintained its position as the top-selling smartphone in several major markets, including the United States, urban China, the United Kingdom, Germany, Australia, and Japan. Customer satisfaction rates are reported to be remarkably high at 98%, according to 541 Research.
In the Chinese market, Apple experienced a slight decline in year-over-year sales by 6.5%, or less than 3% when adjusted for constant currency. Despite this, the installed base in China has hit record levels, with significant growth in the number of customers upgrading to new models. The iPhone 15 is reportedly outselling its predecessor, the iPhone 14, at the same point after launch. Moreover, iPhones hold the top three positions in sales among smartphone models in urban China.
Apple's CEO Tim Cook has been reserved on details regarding the licensing of Apple's artificial intelligence by the Chinese government, only stating that the company is "constructively engaged" in the process.
Looking forward, Apple anticipates that sales growth for the September quarter will align with the 5% increase observed in the June quarter, with the services sector expected to continue its double-digit growth.
Rosenblatt's analyst projects a 5.9% year-over-year consolidated sales growth for Apple, with iPhone sales expected to rise by 3% and accelerate further, potentially reaching mid-teens growth by fiscal year 2026.
This forecast is driven by the assumption that the 5G transition, which began with the iPhone 12 and resulted in a 39% peak growth, signifies a platform change with comparable dynamics. The revised price target of $261 assumes that Apple's stock will trade at 30 times the projected earnings for fiscal year 2026, closely mirroring current multiples.
Apple has seen a resurgence in iPhone sales, particularly in the Americas and Europe, surpassing Wall Street expectations for the fiscal third quarter. This growth trend has been attributed to the company's strategic focus on artificial intelligence (AI) to drive customer interest.
InvestingPro Insights
As Apple Inc. (NASDAQ:AAPL) continues to navigate the competitive smartphone market and global financial landscape, the latest data from InvestingPro provides a detailed snapshot of the company's financial health and market position. With a robust market capitalization of $3.35 trillion and a P/E ratio of 33.7, Apple stands as a formidable player in the technology sector. The company's commitment to shareholder returns is evident, having raised its dividend for 12 consecutive years, a sign of financial stability and confidence in future earnings.
InvestingPro Tips reveal that Apple is trading at a high earnings multiple, which indicates a strong market belief in the company's future growth potential despite the current high valuation. Additionally, 11 analysts have revised their earnings upwards for the upcoming period, suggesting that the market anticipates continued financial success for the company. For investors looking for more insights, there are over 16 additional InvestingPro Tips available, providing a deeper analysis of Apple's market position and future outlook.
With a slight revenue decline of 0.9% over the last twelve months as of Q2 2024, Apple's financials reflect the challenges faced in markets like China. However, the company has managed to maintain a high gross profit margin of 45.59%, demonstrating its ability to retain profitability even in a tough sales environment. The positive three-month price total return of 26.37% reflects investor optimism and the stock's resilience. These metrics, coupled with a fair value estimate of $230 by analysts, suggest a potential upside for investors considering Apple's shares.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.