Sinéad Carew
(Reuters) – Apple Inc shares rose 2.6% on Monday after prominent Bernstein Societe Generale (OTC:) Group analyst upgraded the stock to outperform, citing prospects for sales of replacement phones using upgrades generative artificial intelligence.
Apple was on track for its biggest one-day gain in about two weeks after the upgrade, marking the stock’s first “buy” rating since early 2018.
Bernstein’s Toni Sacconaghi upgraded the stock from “market perform” and wrote Monday that Apple has been hurt by a weak iPhone 15 launch cycle and concerns that its business in China is structurally weak.
But the analyst argues that China’s weakness is “more cyclical than structural” and that its business there is “exhibiting much higher volatility” than Apple’s overall business.
And Sacconaghi wrote that “replacement cycle tailwinds and additional generative AI capabilities have positioned Apple well for a strong iPhone 16 cycle.”
He estimates the company could report revenue of $416.9 billion and earnings per share of $7.40 by 2025, beating consensus expectations for revenue of $412.1 billion and earnings per share of $7.13. He also said iPhone sales could rise 10% year over year to 248 million.
And while Sacconaghi said expectations for Apple’s fiscal second-quarter results, due Thursday, are low, he noted the stock is “entering a seasonally strong trading period” having outperformed in 15 of the last three months before the iPhone’s launch. months. 17 years.
remove advertising
.
Sacconaghi maintained his price target of $195, which compares to Apple’s last trading price of $173.76 on Monday. The current session high was $176.03.
The analyst has had a “market perform” rating on Apple since he downgraded it from “outperform” in February 2018. It began coverage with a market perform rating in November 2006 and then upgraded it to outperform in October 2008. .
Apple (NASDAQ:) shares were last down 9.7% year-to-date after rising 48% in 2023.