Barclays Adjusts Price Target#
Barclays has raised its price target for Apple Inc. (NASDAQ:AAPL) from $248 to $253 while keeping an Underweight rating on the stock. This adjustment is based on improved revenue estimates for the upcoming June quarter.
Revenue Growth Expectations#
Analyst Tim Long noted that revenue estimates for the June quarter have increased, with expectations of 14-17% year-over-year growth. This growth is largely attributed to better performance from iPhones. In the March quarter, Apple reported a gross margin of 49.3%, which was higher than Barclays' estimate of 47.8%. This was partly due to reduced inventory levels from carriers that helped offset rising memory costs.
Strong Performance in Greater China#
Apple's revenue from Greater China exceeded market expectations for the quarter. The company’s services segment also showed strong growth, which is anticipated to continue at a solid pace in June.
iPhone Revenue and Future Concerns#
While iPhone revenue reached $57.0 billion, it fell short of Barclays' expectations of $58.8 billion but aligned with overall market estimates. The firm expressed concerns about potential supply constraints and rising memory costs, which could impact future earnings. The guidance for operating expenses was also revised upward to between $18.8 billion and $19.1 billion, surpassing previous expectations.
Valuation Insights#
The new price target of $253 is based on a multiple of 25 times the estimated earnings per share for calendar year 2027, which has been adjusted to $10.14 from $9.92. Despite this increase, Barclays remains cautious due to uncertainties around rising costs and Apple's unclear strategy in artificial intelligence. Currently, Apple trades at a price-to-earnings (P/E) ratio of 34.79 and has a market capitalization of $3.98 trillion. Analysts have mixed views on Apple's valuation, with some suggesting it may be overvalued at present levels.