A Wall Street analyst has reaffirmed an optimistic outlook for Apple (NASDAQ: AAPL) stock, even as the iPhone 16 cycle appears underwhelming.
This projection could boost Apple’s share price, which is striving to establish a strong position above the $230 mark. The stock was valued at $228.28 at press time, having risen about 0.1% in the last 24 hours.
On a monthly chart, Apple has exhibited volatility, dropping nearly 3.5%. However, in 2024, AAPL is up over 22%.
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Analyst’s outlook for AAPL stock
Now, Toni Sacconaghi of Bernstein has maintained an ‘Outperform’ rating for the stock, setting a target price of $240. He emphasized the company’s robust long-term potential despite challenges posed by the iPhone 16 cycle.
In an investor note on November 20, Sacconaghi shared what can be viewed as a balanced analysis, highlighting Apple’s strengths while drawing attention to risks that could affect its growth trajectory.
According to the analyst, Apple remains a ‘quality compounder,’ having exhibited the ability to deliver mid-single-digit revenue growth, improved profit margins, disciplined capital return strategies, and double-digit earnings-per-share (EPS) growth. These elements make AAPL an ideal choice for long-term investors.
Sacconaghi also noted Apple’s negative cash conversion cycle, which enhances its attractiveness by making its valuation appear more favorable.
Looking ahead, Sacconaghi identified artificial intelligence (AI) as a significant growth driver for Apple. His optimistic outlook on Apple’s AI potential aligns with Wedbush Securities analyst Dan Ives, who believes introducing AI-driven technologies will launch a new ‘technology supercycle.’
To this end, Ives predicted this momentum could propel Apple to a $4 trillion market capitalization by 2025
Sacconaghi recommended that investors consider increasing their Apple positions if the stock dips below $200 or during the February to April timeframe.
AAPL’s bullish case scenario
In a bullish scenario, he projected that Apple could achieve $9 EPS by fiscal year 2026, resulting in a share price of $290. He maintained this outlook while observing that the iPhone 16 cycle appears less impressive, with demand potentially falling short of expectations.
“While the iPhone 16 cycle appears tepid and could disappoint, we recommend adding to positions below $200 or during the February to April timeframe. In a bull case, Apple could achieve $9 EPS in FY26 at a 32x multiple, or $290/share,” he said.
Since its release, the iPhone 16 has received mixed market reactions, with initial sales figures falling short of expectations.
The disappointing demand prompted several Wall Street analysts to lower their price targets for Apple. For instance, Morgan Stanley (NYSE: MS) forecasted a short-term drop to $200—a decline of over 10% from Apple’s current price.
Further complicating the iPhone 16’s performance, sales were blocked in Indonesia due to local parts regulations. To resolve the issue, reports suggest Apple has committed to investing $100 million in the country as part of a deal to lift the ban.
Amid these concerns, AAPL has struggled to make a decisive move, even as broader markets exhibit bullish sentiment fueled by optimism following Donald Trump’s election victory.
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