A Wall Street analyst has reiterated a favorable perspective on Apple (NASDAQ: AAPL) stock, despite the iPhone 16 cycle showing signs of being underwhelming.
This outlook could provide a boost to Apple’s stock price, which is working to solidify its standing above the $230 threshold. At the time of writing, the stock was valued at $228.28, having experienced a slight increase of approximately 0.1% over the past day.
When viewed on a monthly chart, Apple has displayed fluctuations, with a decline of nearly 3.5%. Nevertheless, AAPL has appreciated by over 22% in 2024.
Analyst’s outlook for AAPL stock
Toni Sacconaghi of Bernstein has upheld an ‘Outperform’ rating for Apple, establishing a price target of $240. He highlighted the company’s strong long-term potential, even in light of the hurdles posed by the iPhone 16 cycle.
In a note to investors on November 20, Sacconaghi presented a balanced analysis, underscoring Apple’s advantages while also pointing out risks that might impede its growth path.
The analyst characterized Apple as a ‘quality compounder,’ noting its ability to achieve mid-single-digit revenue growth, enhanced profit margins, disciplined capital return policies, and double-digit earnings-per-share (EPS) growth, making AAPL a solid choice for long-term investors.
Additionally, Sacconaghi indicated that Apple’s negative cash conversion cycle boosts its appeal by rendering its valuation more attractive.
Looking forward, Sacconaghi emphasized artificial intelligence (AI) as a key growth driver for Apple. His optimistic view aligns with Wedbush Securities analyst Dan Ives, who asserts that the deployment of AI-focused technologies will spark a new ‘technology supercycle.’
Ives has projected that this momentum could elevate Apple’s market capitalization to $4 trillion by 2025.
Sacconaghi also advised investors to consider raising their holdings in Apple if the stock drops below $200 or during the February to April period.
AAPL’s bullish case scenario
In a positive outlook, he anticipated Apple could reach $9 EPS by fiscal year 2026, which would translate to a share price of $290. He retained this forecast while noting that the iPhone 16 cycle seems less compelling, with demand potentially not meeting expectations.
“While the iPhone 16 cycle appears tepid and could disappoint, we recommend adding to positions below $200 or during the February to April timeframe. In a bull case, Apple could achieve $9 EPS in FY26 at a 32x multiple, or $290/share,” he stated.
Since its launch, the iPhone 16 has encountered mixed responses in the market, with early sales figures falling below anticipations.
This lackluster demand has led several Wall Street analysts to revise their price targets for Apple downwards. For instance, Morgan Stanley (NYSE: MS) predicted a near-term decline to $200—more than a 10% drop from Apple’s current value.
Further exacerbating the iPhone 16’s sales performance, the device faced sales hurdles in Indonesia due to local regulation on parts. Reports indicate that Apple has pledged to invest $100 million in the country to help resolve the issue and lift the restrictions.
In light of these concerns, AAPL has faced challenges in making a significant upward move, despite broader market sentiments leaning bullish, stimulated by optimism following Donald Trump’s election victory.
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