Barclays Raises Apple Price Target to $253

Barclays analyst Tim Long raised the price target on Apple (NASDAQ: AAPL) to $253.00 (from $248.00) while maintaining an Underweight rating.

“Our June-Q top-line estimates move higher.

However, we remain concerned around memory/ commodity prices, as there is a lot of uncertainty of the impact on margins and/or elasticity of demand in the back half this year.

There may also be a lot of volatility around the developer conference in June regarding the AI strategy and monetization plan.

Positives: June top-line outlook was much better than expected at 14-17% Y/Y, largely driven by better iPhones. GM for Mar-Q came in at 49.3%, better than our estimate (47.8%) as carrier inventory partially offset memory cost headwinds.

Guidance for June calls for a drop, but not that meaningful. Greater China revenue came in above Street estimates for the quarter.

Services growth remains strong and is guided to a solid growth rate in June.

Concerns: iPhone came in below our expectations at $57.0bn compared to our estimates of $58.8bn, although iPhone was in-line with Street estimates.

Supply constraints and the memory dynamics remain a concern with memory costs expected to drive an increasing impact on business in the June quarter.

Opex outlook of $18.8-$19.1Bn is higher than we expected. The company bought back far less stock than in prior quarters ($12.3B vs prior 10 quarter average of $23.1B).

Ratings and estimates: We lift our estimates, however, we remain UW given the uncertainty of rising costs on units and margins in the back half of the year, and unclear AI strategy.

Our PT moves to $253 on a 25x multiple of CY27e EPS of $10.14. Our prior PT of $248 was based on a 25x multiple of our former CY27e EPS of $9.92.”

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