On Monday, JPMorgan reiterated its Overweight rating on Apple Inc (NASDAQ:AAPL) shares with a steady price target of $265. The firm anticipates Apple to present a combination of stronger-than-expected fourth-quarter results and weaker-than-anticipated guidance for the first quarter of 2025.
This forecast aligns with Apple's history of surpassing its own projections, which could present a favorable scenario for the company's shares leading into the fourth-quarter earnings report.
The analyst from JPMorgan highlighted that iPhone shipments for the fourth quarter are expected to be robust due to a successful supply ramp-up of the iPhone 16, positioning Apple favorably for shipments during the period, traditionally aimed at stocking inventory before the holiday season.
Despite a slower initial sell-through for the iPhone 16 series compared to the iPhone 15, recent weeks have seen an uptick in momentum. However, this improvement is projected to result in slightly lower volumes year-over-year.
For the first quarter of 2025, iPhone revenue is predicted to fall below the consensus, even as it grows year-over-year, driven by pricing and product mix, while shipment volumes are likely to show a moderate year-over-year decline.
The analyst expects that the introduction of Apple Intelligence will bolster demand, leading to revenue outperformance in the second and third quarters of 2025, which would be evident in the calendar year 2025 as the impact of Apple Intelligence on consumer demand becomes apparent.
In preparation for the upcoming earnings report, JPMorgan has adjusted its estimates, increasing revenue predictions for the fourth quarter of 2024 and decreasing them for the first quarter of 2025.
Earnings per share (EPS) for the fourth quarter are anticipated to surpass consensus due to better-than-expected gross margins, which the consensus may underestimate, especially considering the benefits of the product mix at the beginning of the upgrade cycle. The EPS for the first quarter of 2025 is expected to align with consensus predictions.
Despite these adjustments, JPMorgan maintains its December 2025 price target of $265 for Apple shares (NASDAQ:AAPL), underpinned by the anticipated AI-driven upgrade cycle for iPhones.
In other recent news, Apple Inc. recently secured a victory in a patent case against Masimo (NASDAQ:MASI) Corporation. The federal jury ruled that Masimo's W1 and Freedom smartwatches, along with their chargers, infringed on two of Apple's design patents. Despite the infringement finding, Apple was awarded only a nominal $250 in damages.
The primary goal of the lawsuit, according to Apple's legal team, was to secure an injunction to halt sales of Masimo's smartwatches. The jury also determined that Masimo's current smartwatch models do not infringe on Apple's patents.
Furthermore, Apple is among the tech giants set to announce their quarterly earnings results soon. Other companies include Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN). These companies, often referred to as the "Magnificent Seven," play a significant role in influencing broader market trends.
In recent developments, Taiwan's economic growth slowed in the third quarter, with a decrease in domestic investment and consumption. The country's gross domestic product (GDP) expanded by 3.4% from a year earlier, a decline from the 5.06% growth seen in the second quarter. Taiwan Semiconductor Manufacturing Co, a key supplier to companies like Apple, is among those driving the export figures.
These are some of the recent developments impacting Apple and its market.
InvestingPro Insights
As we consider JPMorgan's outlook on Apple, it's worth examining some key financial metrics and insights from InvestingPro. Apple's market capitalization stands at an impressive $3.52 trillion, reflecting its dominant position in the tech industry. The company's P/E ratio of 35.1 suggests that investors are willing to pay a premium for Apple's earnings, which aligns with JPMorgan's optimistic stance.
InvestingPro Tips highlight that Apple has raised its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This consistent dividend growth, coupled with a current dividend yield of 0.43%, may provide additional appeal to long-term investors beyond the potential for capital appreciation discussed in the JPMorgan analysis.
Another relevant InvestingPro Tip notes that Apple is trading near its 52-week high, which corroborates the positive momentum mentioned in the article. The company's strong financial position is further evidenced by its ability to cover interest payments with its cash flows, indicating financial stability as it navigates the anticipated product cycles and AI innovations.
For readers interested in a more comprehensive analysis, InvestingPro offers 16 additional tips that could provide deeper insights into Apple's financial health and market position.
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