Key Highlights
- According to the firm, the new $315 price target reflects an “unchanged 32x multiple on our new FY27 EPS of $9.83 (up from $9.55).” Earnings expectations for FY27 were raised on higher revenue from price hikes, a slightly higher iPhone shipment forecast, despite lower gross margins and an unchanged opex trajectory.
- Overall, the firm remains confident in Apple’s pricing power and AI investment payoff.
- “3% upward revision to FY27 EPS is a function of (1) 130bps lower gross margin due to higher memory input costs, (2) 5% higher revenue to reflect price hikes due to commodity cost inflation, and a slightly higher iPhone shipment forecast assuming 0.1- year Y/Y replacement cycle elongation, and (3) a largely unchanged opex trajectory that is elevated vs.
- historical seasonality given incremental investments in AI.
- As such, we remain Overweight-rated with a 14% risk-adjusted risk/reward and a 1.6 bull-to-bear skew.” Apple is a technology company known for its consumer electronics, software, and services.