Apple shares rise 3% after analyst upgrade

By Thomson Reuters Apr 29, 2024 | 2:13 PM

By Sinéad Carew

(Reuters) – Shares in Apple Inc were up 3% on Monday after a well-known analyst at Bernstein Societe Generale Group upgraded the stock to an “outperform” rating, pointing to the prospects for phone replacement phone sales with help from generative artificial intelligence updates.

Apple was on track for its biggest one-day gain in roughly two weeks. Bernstein’s Toni Sacconaghi wrote that Apple had been hurt by a weak iPhone 15 cycle as well as fears that its China business is structurally impaired.

But the analyst argued that China weakness is “more cyclical than structural” and that its business there has “exhibited much higher volatility” than Apple’s overall business.

And Sacconaghi wrote that “replacement cycle tailwinds and incremental generative AI features set up Apple well for a strong iPhone 16 cycle.”

Looking to 2025, he is estimating that the company could report $416.9 billion in revenue and $7.40 earnings per share, which would beat consensus expectations for revenue of $412.1 billion and $7.13 EPS. He also said iPhone unit sales could grow 10% year-over-year to 248 million.

And while Sacconaghi said that expectations are low for Apple’s fiscal second quarter results, due out on Thursday, he noted the stock is “entering its seasonally strong trading period” as it has outperformed in the three months before its iPhone launches in 15 of the last 17 years.

Sacconaghi kept his price target of $195, which compares with Apple’s last trading price of $174.43 on Monday.

Apple shares were last down more than 9% year-to-date after rising 48% in 2023.

(Reporting by Sinéad Carew; editing by Jonathan Oatis)