Apple Stock Rating Adjusted After Price Rally
Phillip Capital recently adjusted its Apple stock rating following a significant price rally. Even though the firm lowered its rating from "Accumulate" to "Neutral", it also increased its target price for the stock to $220 from $194.
Reason for Re-rating
The primary reason for this re-rating was Apple's recent share price movement. However, despite this adjustment, Phillip Capital sees a positive outlook for Apple’s future.
New Features and Innovations
Apple introduced several new features at the Worldwide Developers Conference on June 10, most notably Apple Intelligence. This new AI framework supports a variety of features across apps, making them more efficient and integrated. Some of these new updates are compatible only with the latest iPhone 15 Pro/Pro Max, iPads, and MacBooks with M series chips.
Phillip Capital believes these new features will likely spark a fresh round of device replacements, as users will want to take advantage of these innovations. Additionally, improved device synchronization is expected to boost product demand further.
"Newly announced features will likely trigger a new round of replacement cycle," stated Phillip Capital.
Investment Insights
Despite the positive outlook on product demand and device synchronization, the firm decided to lower its rating considering the current share price. The new price target predicts a terminal growth rate of 3%. Phillip Capital also raised its iPhone unit estimates by 8% and increased FY24 revenue/PATMI estimates by 5%/3% to account for higher upgrade demands.
Conclusion
In summary, while Phillip Capital recognizes the incredible features Apple is bringing to the market and the potential growth in demand, it remains cautious due to the recent surge in share prices. The revised target price of $220 and the proactive estimates reflect this balanced viewpoint.
Keep an eye on Apple's developments and consider potential market shifts when thinking about investment opportunities.