Apple momentum to continue, overcoming any memory chip shortage, Evercore ISI says
Apple shares are likely to keep outperforming, making the iPhone maker a good addition to portfolios, according to Evercore ISI. The investment bank has an outperform rating on the Tim Cook-led company, raising its 12-month price target 11%, to $365 from $330, suggesting 22% upside from Wednesday’s close. “While investors continue to over-index on near-term memory headwinds and timing of Apple Intelligence, we think the more durable story is Apple’s unrivaled ecosystem that enables them to sustain mid/high-single digit revenue growth and low/mid-teens [earnings per share]/[free cash flow] growth through a combination of [catalysts],” analyst Amit Daryanani said Thursday in a note to clients. Apple has recently overcome concern among some investors that a memory chip shortage threatens its highly anticipated smartphone launches and push into artificial intelligence. Apple has scored several all-time highs in the past week and the stock is ahead 15.5% in the past month alone, more than twice the gain in the S & P 500, which is ahead less than 7%. AAPL 1M mountain Apple is more than 15% higher in the past month However, Apple’s services business, including Apple Music, Apple TV+, its iCloud platform and Apple Pay, should drive profits, helping to offset the effect of memory-linked headwinds, according to Evercore ISI. The Cupertino-Calif-based company is still on track to roll out several high-end iPhones, including a foldable model, later this year, which could further boost gross margins, according to Daryanani. Opportunities to make money off artificial intelligence could also boost the stock, Evercore said. “The AI debate is more asymmetric than investors appreciate, as a successful Apple Intelligence launch this fall could unlock multiple monetization paths without requiring AAPL to match the capex intensity of hyperscalers,” the analyst wrote. The Evercore recommendation matches the Wall Street consensus, where 33 of 48 analysts rate Apple a buy or strong buy, LSEG data shows.
