Apple Inc. (AAPL) remains a "Buy" according to BofA Global Research, despite a revised price objective of $253, down from $256, due to a weaker iPhone outlook. The report highlights Apple's earnings resiliency, with a marginal EPS impact despite a 10 million reduction in iPhone unit estimates for the year. The price target is based on a 30x multiple of the revised 2026 EPS estimate of $8.37.
The report centers around Apple's upcoming F1Q25 earnings release, expected to show strong initial demand for the iPhone 16. However, BofA has lowered its F2Q iPhone unit estimate to 49 million, citing weak macro conditions and a staggered rollout of Apple Intelligence features. Despite this, services are seen as a growth driver, with App Store revenue growing 15% y/y in F1Q25.
BofA notes that "weaker iPhone sales are well understood by investors," and maintains a positive outlook on Apple's margin resiliency and strong cash flow. The report also mentions potential regulatory tailwinds and the upcoming launch of the iPhone SE, which will feature Apple's in-house 5G modem, as a path to higher gross margins.
Apple was trading at $224.93, up 0.57% on January 24, at 9:40.