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BofA reiterates Buy on Apple with $256 target ahead of election

EditorEmilio Ghigini
Published 11/05/2024, 07:00 PM
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On Tuesday, BofA Securities maintained a Buy rating on Apple Inc. (NASDAQ:AAPL) stock with a steady price target of $256.00. The firm's analysis considered the potential effects of the U.S. presidential election on November 5, 2024, on Apple's earnings.

Three scenarios were outlined: one where the new administration keeps the current trade status with no new tariffs on imports from China; another where new tariffs are imposed, but Apple holds its product prices; and a third where Apple would increase prices in response to new tariffs.

The analyst from BofA Securities suggested that the likelihood of new import tariffs could rise if the Republicans gain control of both Congress and the Presidency. However, the impact on Apple's earnings is expected to be minimal regardless of the scenario.

Furthermore, the analyst noted that a Republican administration might be more favorable towards resolving legal cases involving Google/DOJ and Apple/DOJ and could advocate for less stringent European regulations concerning the Digital Markets Act (DMA).

The endorsement of the Buy rating is supported by several factors, including a multi-year iPhone upgrade cycle, positive gross margin trends, and robust free cash flow (FCF) for the tech giant. These elements contribute to the firm's positive outlook on Apple's stock performance.

BofA Securities' stance on Apple remains unchanged as the market anticipates the outcome of the presidential election. The firm highlights Apple's strong fundamentals and potential resilience against regulatory and tariff-related challenges as key reasons for their optimistic investment rating.

In other recent news, MDA Space Ltd has been upgraded to Outperform by BMO Capital Markets, following Apple's $1.5 billion investment in Globalstar (NYSE:GSAT) for a new satellite constellation project.

MDA, as the prime contractor for Globalstar's latest satellite batch, is expected to significantly benefit from this development. Meanwhile, Apple's App Store revenues and downloads have shown a significant increase, leading BofA Securities to maintain a Buy rating on the tech giant.

In regulatory developments, the European Commission has demanded that Apple align its iPadOS with the EU's Digital Markets Act to promote fair competition and transparency in digital markets. This might require modifications to Apple's iPadOS to meet the new standards.

Warren Buffett's Berkshire Hathaway (NYSE:BRKa) has reduced its investments in stocks, including Apple, increasing its cash reserves to a record $325.2 billion, a move interpreted as a cautious approach by CFRA Research's analyst, Cathy Seifert.

Apple Inc. reported a record-breaking revenue for its fourth fiscal quarter of 2024, despite a one-time tax charge affecting net income. The revenue surge was driven by strong iPhone sales and a surge in services revenue. These are some of the recent developments that could influence investor decisions.

InvestingPro Insights

To complement BofA Securities' analysis of Apple Inc. (NASDAQ:AAPL), recent data from InvestingPro offers additional context. Apple's market capitalization stands at an impressive $3.36 trillion, reflecting its dominant position in the technology sector. The company's P/E ratio of 35.8 (adjusted for the last twelve months) indicates that investors are willing to pay a premium for Apple's earnings, aligning with the analyst's positive outlook.

InvestingPro Tips highlight Apple's financial strength and market position. The company has raised its dividend for 13 consecutive years, demonstrating a commitment to shareholder returns. This consistent dividend growth supports BofA's view on Apple's robust free cash flow. Additionally, Apple is noted as a prominent player in the Technology Hardware, Storage & Peripherals industry, which reinforces its potential to navigate challenges such as potential tariffs or regulatory changes mentioned in the article.

It's worth noting that InvestingPro offers 13 additional tips for Apple, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable when considering the various scenarios outlined by BofA Securities regarding the upcoming U.S. presidential election and its potential impact on Apple's business.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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