TLDR
- Phillip Securities lowered Apple’s price target from $235 to $200, maintaining a Neutral rating
- Apple expects tariffs to add $900 million to costs in the June quarter
- Despite beating Q2 earnings estimates, Apple stock sold off 3.5% following the news
- Services revenue grew 12% year-over-year, while wearables revenue fell 5%
- Analysts have mixed views with price targets ranging from $170 to $300
Apple Inc. is facing headwinds as analysts revise their outlook on the tech giant. Phillip Securities has cut its price target for Apple shares from $235 to $200, keeping a Neutral rating on the stock.
The adjustment comes as Apple grapples with increased costs and greater investments in U.S. operations. The company is also facing challenges in the Chinese market.
According to analyst Helena Wang at Phillip Securities, rising tariffs are a key factor behind the revised outlook. The firm has reduced its profit after tax and minority interest (PATMI) estimates by 2% for fiscal year 2025 and 4% for fiscal year 2026.
These tariff concerns were echoed by Apple CEO Tim Cook during the company’s recent earnings call. Cook projected that tariffs would add $900 million to Apple’s costs in the current quarter ending in June.
“Assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add $900 million to our costs,” Cook told analysts.
The CEO was unable to provide insights into the tariff effects beyond the June quarter, creating uncertainty for investors looking at the second half of the year.
Mixed Signals from Recent Earnings
Despite these challenges, Apple reported growth in its March quarter earnings. Revenues, net profit, and earnings per share each grew by 5%, 5%, and 8% respectively, meeting consensus estimates.
The company’s Q2 results beat expectations, but only narrowly. Apple reported earnings per share of $1.65, just 3 cents ahead of forecasts. Revenue came in at $95.4 billion, $840 million above consensus.
The services division was a bright spot, with revenue climbing 12% year-over-year, double the overall company growth rate. iPad revenue also increased by 15%.
However, the wearables, home, and accessories segment saw a 5% decline in revenue.
Apple stock opened about 5% lower following the earnings release but recovered somewhat to trade 3.5% lower by midday. It’s currently trading near $205, with the next support level at $196.
Analyst Sentiment Remains Divided
The analyst community shows mixed sentiment about Apple’s near-term prospects. According to data cited in the reports, 21 analysts have recently revised their earnings expectations downward.
Price targets for Apple stock range widely from $170 to $300, reflecting the divided opinion among market watchers.
Several firms have adjusted their ratings in response to recent developments. Jefferies downgraded Apple to an Underperform rating, citing concerns over gross margin pressures and potential tariff impacts.
Citi, on the other hand, maintained a Buy rating, highlighting strong sales in iPhones and Macs despite challenges in the Wearables segment.
UBS kept a Neutral rating, noting the lack of detailed segment guidance and potential iPhone revenue decline. Rosenblatt similarly downgraded Apple to Neutral, citing the need for innovative products to drive growth.
Phillip Securities has also recalibrated its capital expenditure projections for Apple. The firm now expects CAPEX to rise by 1.2 times in FY25 and 2.3 times in FY26, indicating a major increase in the company’s investment in its U.S. operations.
Despite these changes, the firm has kept the weighted average cost of capital at 6.5% and the terminal growth rate at 3%, unchanged from previous estimates.
In a strategic move, Apple is partnering with Anthropic to develop AI-powered software to enhance its coding platform, reflecting its continued focus on leveraging AI technology.
Apple stock has lost part of its recent rally, which had advanced for eight straight sessions. The next layer of support comes at $180, just above the 61.8% Fibonacci level near $178.
For Apple stock to break out of its 2025 downtrend, it would need to overcome the descending 50-day Simple Moving Average near $215.50 before putting in a new range high above the late March resistance at $225.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
