Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Will Apple Beat the Odds? Citi Says Yes, KeyBanc Raises Eyebrows

Published 14/12/2023, 19:21
© Reuters.  Will Apple Beat the Odds? Citi Says Yes, KeyBanc Raises Eyebrows
AAPL
-

Benzinga - by Anusuya Lahiri, Benzinga Editor.

Citi analyst Atif Malik maintained a Buy rating on Apple Inc (NASDAQ: AAPL) with a price target of $230.

Apple stock is up 50% year-to-date versus the S&P500, up 20%, and investors are asking if the stock could outperform again next year.

Looking into next year, Malik modeled double-digit EPS ~14% and FCF ~11% growth on continued gross margin expansion.

Malik noted that the bears on the stock are missing the structural gross margin expansion story driven by iPhone premiumization, acceleration in services sales, and the silicon insourcing benefit and favorable commodity prices that drove P/E multiple expansion this year.

Malik expected the above trends to continue next year and viewed AI Phones and Vision Pro adoption as potential upside catalysts.

KeyBanc analyst Brandon Nispel maintained a Sector Weight rating on Apple.

The analyst maintained his below-consensus Q1 FY24 Hardware revenue estimates.

Nispel's Key First Look Data shows Indexed Spending -5% month-on-month in November, below the 3-year average of +11%.

Quarter-to-date, he saw back-to-back month-on-month declines, which appear negative entering Holiday shopping.

Overall, Nispel's data tells him to expect below-average growth for Q1 FY24.

Although October benefited from timing around iPhone, he would have thought November would be better given a push in timing around Mac to November and Black Friday shopping.

Nispel tweaked his FCF estimates to reflect working capital assumptions, though he maintained his below-consensus Hardware revenue estimates.

With AAPL trading at 19.3x, FY25 adjusted EBITDA versus the 3-year, 10-year, and peer averages at 18.7x, 12.0x, and 14.8x, respectively, Nispel finds AAPL expensive.

Nispel projected Q1 revenue and EPS of $116.8 billion and $2.07.

Price Action: AAPL shares traded lower by 0.23% at $197.50 on the last check Thursday.

Latest Ratings for AAPL

DateFirmActionFromTo
Mar 2022BarclaysMaintainsEqual-Weight
Feb 2022Tigress FinancialMaintainsStrong Buy
Jan 2022Credit SuisseMaintainsNeutral
View More Analyst Ratings for AAPL

View the Latest Analyst Ratings

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.