On Friday, Evercore ISI maintained a positive outlook on Apple Inc (NASDAQ:AAPL) stock, keeping an Outperform rating and a $220.00 price target. The firm highlighted Apple's better-than-expected financial results and promising commentary that surpassed investor concerns.
Apple's recent quarterly report showed revenues of $90.8 billion and earnings per share (EPS) of $1.53, slightly above the consensus estimates of $90.4 billion in revenue and $1.51 EPS. Despite a year-over-year sales decline of 4%, adjustments for one-time items indicate an actual increase.
The company experienced growth in its services sector, with a 14% increase to $23.9 billion, which helped to balance out declines in hardware sales, including iPhones, Wearables, and iPads.
Notably, the performance in China was stronger than anticipated, with a 9% year-over-year decrease in sales compared to a 12% drop in the previous quarter. Apple also observed growth in iPhone sales on the Chinese mainland, suggesting resilience amidst macroeconomic challenges.
Looking ahead to the June quarter, Apple forecasts modest year-over-year revenue growth, with expectations of approximately $84-85 billion in sales. The company anticipates double-digit growth in services and iPads, while iPhone sales are projected to be flat or slightly down.
The guidance suggests a low-single digit sales growth and an implied EPS of around $1.34, modestly outperforming the anticipated $83 billion in sales and $1.31 EPS.
Evercore ISI is optimistic about Apple's upcoming Worldwide Developers Conference (WWDC), where the tech giant is expected to detail its artificial intelligence (AI) strategy for both hardware and services.
The firm believes Apple can achieve AI advancements without the significant capital expenditures seen by other technology companies. Additionally, updates to the iPad and Mac portfolio are anticipated in the coming weeks.
In conclusion, Evercore ISI's Outperform rating and $220 price target reflect confidence in Apple's ability to sustain revenue and EPS growth acceleration in the forthcoming quarters.
InvestingPro Insights
Apple Inc's (NASDAQ:AAPL) financial resilience is further underscored by key metrics and insights from InvestingPro. The company's aggressive share buyback program is a testament to management's confidence in the business, as they work to enhance shareholder value. Alongside this, Apple's consistent dividend growth, with dividends raised for 12 consecutive years, provides a reliable income stream for investors.
InvestingPro Data reveals a robust market capitalization of $2.67 trillion USD and a P/E ratio of 26.8, indicating a strong investor belief in the company's value and future earnings potential. While the P/E ratio is high relative to near-term earnings growth, suggesting a premium valuation, Apple's low price volatility reflects a stable investment. The company's revenue for the last twelve months as of Q1 2024 stands at $385.71 billion USD, with a slight decrease of 0.47%, but a quarterly revenue growth of 2.07% in Q1 2024 shows signs of resilience.
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