On Friday, BofA Securities adjusted its outlook for Apple Inc. (NASDAQ:AAPL), reducing the price target slightly from $253 to $256 while sustaining a Buy rating on the shares. Currently trading at $223.66, Apple appears overvalued according to InvestingPro analysis, though analyst targets range from $183 to $325. The adjustment comes ahead of Apple's financial results for the first quarter of fiscal year 2025, which are set to be released after the market closes on Thursday, January 30.
Analysts at BofA anticipate a robust earnings report, bolstered by the initial wave of demand for the iPhone 16. Projections for the quarter's revenue are set at $126 billion, marginally above the consensus estimate of $124 billion. This would build upon Apple's impressive last twelve months revenue of $391.04 billion and strong gross profit margin of 46.2%. Furthermore, BofA estimates iPhone unit sales to reach 79 million, surpassing the Street's expectation of 77 million.
Despite the positive outlook for the December quarter, BofA has revised its projections for the March quarter downward, attributing this to a combination of a challenging macroeconomic environment and the incremental rollout of Apple's Intelligence features, which have not yet achieved broad market penetration. Consequently, the forecast for iPhone units in the March quarter has been reduced to 49 million from the previous estimate of 56 million, which is also below the Street's prediction of 52 million.
Looking further ahead, BofA has adjusted its iPhone unit sales forecasts for fiscal years 2025 and 2026 to 229 million and 246 million respectively, down from earlier predictions of 239 million and 257 million.
The Services segment is identified as a key growth area for Apple, with revenue growth of 13% year-over-year expected for the first quarter and 14% for the remainder of the fiscal year. This optimism is supported by recent data indicating a 15% year-over-year increase in App Store revenue during the first quarter of fiscal 2025.
In their commentary, BofA analysts underscored that the anticipated weaker iPhone sales are already factored into investor expectations. They reiterated their Buy rating, citing Apple's resilience in maintaining profit margins, favorable gross margin trends, and robust cash flow generation. The analysts also noted that investor attention is likely to pivot towards the upcoming Worldwide Developers Conference (WWDC), burgeoning AI partnerships such as Project Gemini, and the anticipated launch of the iPhone 17.
In other recent news, tech giants Apple Inc. and Alphabet (NASDAQ:GOOGL) Inc. are under investigation by the UK's Competition and Markets Authority over concerns of mobile market dominance. The probe aims to determine if the companies' mobile operations are creating unfair barriers for competitors. Goldman Sachs (NYSE:GS) has adjusted its price target on Apple stock to $280, maintaining a Buy rating, and expects the company to achieve earnings per share of $2.35 for the first quarter of fiscal year 2025.
Wedbush analysts maintain an Outperform rating for Apple, with a target price of $324, despite recent market volatility. However, Jefferies and Loop Capital have downgraded Apple due to concerns over its earnings and revenue guidance targets. Samsung Electronics (KS:005930) is set to launch an ultrathin version of its Galaxy S25 phone, signaling a potential competition in the slim smartphone segment this year, with Apple predicted to unveil an ultra-thin iPhone later this year.
These recent developments highlight the dynamic landscape of the tech industry, with firms like Goldman Sachs, Wedbush, Jefferies, Loop Capital, and Samsung Electronics providing various analyses and projections. However, these are merely the latest in a series of ongoing events, and it's crucial for investors to stay informed about the most recent developments.
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