Citi maintains its "Buy" rating on Apple Inc. (AAPL), setting a target price of $255, valuing the company at 30x P/E on FY2026 EPS of $8.51. The report highlights Apple's resilience amid macroeconomic challenges, with a focus on the upcoming iPhone SE4 and iOS 18.4 update, featuring a significant Siri enhancement. Despite a slight adjustment in iPhone unit forecasts for the March quarter, Citi anticipates a 5% y/y growth in 2025 and 2026, aligning with historical seasonality and supply chain insights.
The report underscores the strength in Apple's services segment, with App Store revenue growing 15% y/y in Q4, surpassing the company's guidance. Emerging markets, particularly India, show promising growth, with iPhone shipments entering the top 5 in Q4 2024. However, regulatory risks, especially in Europe, and potential impacts from US-China tensions remain key concerns.
Citi notes, "We believe Apple's growth in active installed base of products and subscriptions is sticky, and should help to drive demand in future years." The report also anticipates gross margin expansion driven by a higher blended ASP in iPhone sales and a growing services sales mix.
Apple's stock was trading at $231.59, up 3.95% on January 27, at 3:00 PM.