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Apple stock rating cut at Phillip Capital following rally

Published 06/18/2024, 06:52 PM
© Reuters.

Apple (NASDAQ:AAPL) was cut to Neutral from Accumulate by analysts at Phillip Capital in a note Tuesday, with the firm citing the iPhone maker's recent share price movement as its primary reason for the re-rating. However the firm increased its target for the stock to $220 from $194.

The investment firm noted Apple's Worldwide Developers Conference on June 10 where it introduced Apple Intelligence, its AI framework that supports a range of new features that can be integrated across apps to perform tasks, as well as other updates.

"We believe the newly announced features will likely trigger a new round of replacement cycle, as Apple Intelligence is only compatible with the iPhone 15 Pro/Pro Max and iPads and MacBooks with M series chips," said Phillip Capital.

Analysts add: "Additionally, improved device synchronization is expected to further increase product demand, as people are more motivated to get a MacBook to pair with their iPhone (or an iPhone to pair with their MacBook) to enjoy the synchronization benefits."

Despite the positives, Phillip Capital lowered the rating when "considering the recent share price movements." The new price target forecasts a terminal growth rate of 3%, while the firm raised its iPhone unit estimates by 8% and increased FY24 revenue/PATMI estimates by 5%/3% to account for a higher upgrade demand for products.

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