On Tuesday, Evercore ISI upheld a positive stance on Apple Inc. (NASDAQ:AAPL), maintaining its Outperform rating and a price target of $260.00. With Apple's stock trading near its 52-week high at $244.60 and commanding a market capitalization of $3.67 trillion, InvestingPro analysis suggests the stock is currently trading above its Fair Value. Analysts at Evercore ISI anticipate the upcoming release of the fourth-generation iPhone SE to play a key role in Apple's growth, particularly from the June quarter onwards. The new model is expected to boast significant hardware enhancements and a starting price of $499, an increase from the previous generation's $429.
The launch of the iPhone SE is predicted to mirror past cycles, potentially resulting in over 20 million units sold within its first year. This volume could add approximately $12 billion to Apple's annual revenues, amounting to around 3% of the company's current revenue base of $395.76 billion. With a robust gross profit margin of 46.52%, InvestingPro data shows Apple maintains strong profitability metrics, with 14+ additional key insights available to subscribers. The analysts also expect the new iPhone SE to contribute about 20-25 cents to Apple's earnings per share (EPS), providing roughly a 3% boost.
Evercore ISI suggests that by potentially insourcing baseband and combo chips for the iPhone SE, Apple could improve its gross margins, helping to counterbalance higher DRAM costs. The price increase for the new iPhone SE is seen as justifiable, considering it remains lower than Apple's average selling price for iPhones, which is over $900.
The fourth-generation iPhone SE is anticipated to be more than just a minor update, featuring multiple improvements including Apple Intelligence. Emerging markets, where growth has been robust for Apple, are expected to provide further upside. The more affordable pricing of the SE could attract additional consumers and support the double-digit growth in Apple's installed base.
In summary, Evercore ISI's analysis indicates that the new iPhone SE could generate significant revenue for Apple, with the potential to exceed $12 billion, based on historical trends and current market demand for a more cost-effective iPhone option. According to InvestingPro, analyst consensus remains positive despite 22 recent downward earnings revisions, with price targets ranging from $197 to $325. Subscribers can access Apple's comprehensive Pro Research Report, part of an exclusive analysis available for 1,400+ top US stocks, offering deep insights into the company's financial health, which currently rates as "GOOD" based on multiple factors.
In other recent news, Apple Inc. has been the subject of various developments. KeyBanc Capital Markets maintained an Underweight rating on Apple with a $200 target, citing concerns about a significant decline in hardware spending and potentially inflated long-term growth expectations. The firm's analysis noted a 40% drop in indexed spending month-over-month and expressed concern over aggressive consensus estimates for Apple's fiscal second quarter.
On a different note, data from the China Academy of Information and Communications Technology (CAICT) showed a slight 0.6% increase in shipments of foreign-branded smartphones, including Apple's, in China in December. Total (EPA:TTEF) phone sales in China also saw a 22.1% increase, reaching 34.53 million units in December.
In another development, UK-based company Arm, which provides intellectual property to firms including Apple, is reportedly considering selling its own chips and has begun recruiting from its customer base. Lastly, Apple's CEO, Tim Cook, has teased a new product launch scheduled for February 19, though the company has not yet confirmed the details of the product or its features. These are the recent developments concerning Apple.
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