On Friday, Citi reaffirmed its positive stance on Apple Inc. (NASDAQ:AAPL) stock, maintaining a Buy rating and a $210.00 price target for the tech giants shares.
The endorsement follows Apple's modest outperformance in its March quarter and expectations for continued low single-digit growth, forecasting over $83 billion in revenue for the June quarter.
Apple's stock experienced a 6% increase after hours, propelled by the company's earnings report which slightly exceeded expectations by two cents. iPhone sales demonstrated remarkable resilience, declining only 10% year-over-year, or remaining flat when adjusted for last year's pent-up demand.
Additionally, sales in Greater China showed signs of recovery with an 8% decrease, while iPhone sales in Mainland China actually grew on a reported basis.
Apple's CEO expressed optimism about the potential of Generative AI and teased an "incredible" event at the upcoming Worldwide Developers Conference (WWDC) next month.
In a significant move, Apple also announced a substantial share buyback program, committing to $110 billion or more, which exceeds the $90 billion repurchase run rate from the past three fiscal years.
Citi's analysis anticipates a 9% decrease in iPhone unit sales in the 2024 calendar year, followed by a 9% increase the subsequent year. The firm is looking forward to more details on Apple's AI initiatives at the WWDC.
Citi has slightly increased its EPS forecasts for fiscal years 2024, 2025, and 2026 by approximately 1% each, while maintaining the $210 price target based on a consistent 30x P/E ratio.
The firm's continued recommendation to Buy is based on the expectation of increased demand for AI-powered smartphones in the 2025 calendar year and potential for gross margin expansion.
InvestingPro Insights
As Apple Inc. (NASDAQ:AAPL) garners a reaffirmed Buy rating from Citi, the InvestingPro platform provides further financial insights into the company's performance. Notably, Apple's market capitalization stands at a robust $2.67 trillion, reflecting its significant presence in the market. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 26.8, which aligns with the high valuation multiples that Citi's analysis suggests. Additionally, Apple's revenue over the last twelve months as of Q1 2024 reached $385.71 billion, with a slight revenue growth of 2.07% in Q1 2024, indicating the tech giant's continued ability to increase its sales.
An InvestingPro Tip worth highlighting is Apple's aggressive share buyback program, which supports Citi's mention of the substantial $110 billion commitment. This strategy can potentially increase shareholder value and earnings per share over time. Another key point from InvestingPro is the company's consistent dividend growth, having raised its dividend for 12 consecutive years, which may appeal to income-focused investors.
For readers interested in a deeper dive into Apple's financial health and strategic positioning, InvestingPro offers additional insights and tips. Discover more about Apple's financials and get an edge in your investing strategy by using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With 14 more InvestingPro Tips available, investors can gain a comprehensive understanding of Apple's market dynamics and future potential.
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