Evercore ISI Maintains Outperform on Apple, $365 Price Target

Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $365 price target on Apple (NASDAQ: AAPL).

“AAPL reported Jun-qtr results of $109.4B/$2.02 versus street at $109.0B/$1.89, with revenues growing +16% y/y. Notably, EPS included a one-time benefit of 11c from tariff-related refunds.

Growth in the quarter was led by China and Europe (with both growing +22.4% y/y), followed by the rest of APAC (+15.6% y/y), Japan (+13.4% y/y), and the Americas (+11.1% y/y).

Key points to highlight here: 1) Overall gross margins came in at 50.1% (vs. street at 48.1%), though GMs included ~2pts of tariff-related tailwind, implying core GMs coming in line with street and down ~120bps q/q.

2) iPhone strength continued again in the Jun-qtr, growing +21.7% y/y (in line with LQ), with revs of ~$54.3B coming in ahead of street expectations of ~$53.9B.

3) Services revenues came in lighter-than-expected (~$30.7B vs. street at ~$31.4B), with y/y growth decelerating from +16.3% LQ to +12.1% in the Jun-qtr.

Slower App Store data continues to be an investor concern, particularly ongoing weakness across gaming apps.

4) Mac revs came in well ahead of expectations, with segment revs of ~$10.4B beating street at ~$8.7B.

Mac revs in the quarter grew +28.7% y/y, likely benefiting from the recent launch of the MacBook Neo.

5) Growth in Europe accelerated in the quarter, with topline growth exceeding >20% (+22.4% y/y) for the first time since Sept-21, while China growth remained above >20% but decelerated from the Mar-qtr.

Net/Net: The headline print showed a solid beat, though the underlying results sans the 11c EPS one-time tariff refund benefit (which was also a ~2pt benefit to GMs) reflected a largely down the fairway print, with modest revenue and EPS upside.

Positives included continued iPhone strength, a significant Mac beat, and broad-based international growth led by China and Europe.

However, Services modestly missed street expectations and decelerated Q/Q. The major focus on the call will be on memory pressures and Apple’s outlook for gross margins. Maintain OP and $365 target.”

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