Yorkville Ives Reiterates Outperform on Apple, $400 Price Target

Yorkville Ives analyst Dan Ives reiterated an Outperform rating and $400 price target on Apple (NASDAQ: AAPL).

“The December-quarter guide calls for revenue growth of 7% to 10% y/y against the Street’s 5.8%, with Services growth of 8% to 9% against the 10% consensus as FX, third-party licensing, mobile gaming weakness, App Store business model changes, and U.S. link-out rules weigh.

AAPL expects gross margins of 45% to 46% against 46.5% as unusually high memory costs worsened from September and should rise further, with only partial offsets from pricing, carry-in inventory, and lower non-memory component costs, and Siri AI adds cloud and deferral costs.

It also expects operating expenses of $20.4 to $20.8 billion against $20.23 billion, other income of roughly $300 million, and a tax rate of roughly 17%. iPhone Duo remains supply constrained with no visibility on when supply meets demand, December constraints fall on Mac and iPad from memory, and advanced-node constraints are easing.

The Duo is the swing factor the Street has not sized.

We believe Apple can sell roughly 10 million Duo units over the next few quarters, with iPhone Pro Max buyers the natural pool for conversion to a foldable priced well above the rest of the lineup, in a best case roughly 15 million in the launch window through the holidays supply permitting, and 20 to 25 million in 2027 as supply ramps and the device becomes a full-year contributor. iPhone growth of 17% y/y before Duo volumes, a record installed base, and a revenue guide above the Street say the premium cycle is turning; the margin guide says memory is the cost of it, and we would rather own the cycle than fade the margin.

We maintain our OUTPERFORM rating and $400 price target.”

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