Evercore ISI Reiterates Outperform Rating on Apple, $330 Price Target
Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $330.00 price target on Apple (NASDAQ: AAPL).
“AAPL reported another solid BEAT vs. street expectations, with revs/EPS of $111.2B/$2.01 which was ahead of consensus by $1.7B/$0.06.
The upside was driven once again by iPhone growth of +22% y/y, which came in ahead of street at ~20%.
Notably, AAPL’s Mar-qtr revenue performance reflects broad-based strength across geos (all major regions up double-digits) and positive growth across all major product categories (AAPL continues to gain share across iPhone and Mac).
During the EPS call, AAPL also indicated that they no longer view net cash neutral as their formal capital structure target (departure here provides for more flexibility but AAPL does not expect a major change to their capital return framework as their board authorized an additional $100B for share repurchases).
For the Jun-qtr, AAPL guided revs up +14-17% y/y (vs. street at up ~9%), which reflects continued iPhone demand strength and double-digit Services momentum, despite supply constraints on the product side (iPhone and Mac).
Gross margin guidance was also above consensus at 47.5-48.5%, above street at 47.5% and reflects ongoing memory headwinds.
Key points from the call – 1) Supply Constraints: We think had it not been for supply constraints, AAPL would have had ~300bps higher growth ($3-4B) in Mar-qtr.
Constraints are driven by limited availability of advanced SoC nodes.
2) iPhone Demand: We are on track for 20%+ iPhone growth with the 17 cycle; while that could create a tough set-up for iPhone 18, we see foldable phone, pricing benefits, and share gains as sizable tailwinds going forward.
3) Gross-Margins: AAPL is guiding gross margins down ~130bps q/q to ~48%; we expect GMs to trend lower in September due to memory headwinds though AAPL does have a host of partial offsets to this.
4) Services Acceleration: Growth came in at 16% in March with gross margins at 76.7% (+100bps y/y).
Net/Net: AAPL continues to deliver on double-digit momentum driven by iPhone strength amid a dynamic macro/supply chain backdrop.
Top line strength should drive strong double-digit EPS/FCF momentum despite incremental GM headwinds (IEEPA tariffs could be a potential offset) and higher opex spend (R&D in particular).
Looking ahead, we see several upside catalysts including a new iPhone form factor and Apple Intelligence.”
This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.
