Piper Sandler raises Apple's target price but warns that the good news has been reflected in the stock price already
Piper Sandler raised Apple's target price to $225, but warned that the good news has been reflected in the stock price. The analyst at the firm stated that artificial intelligence may become a driving force for Apple's hardware upgrades, and the recovery growth in iPhone sales in China will also bring positive factors. However, considering the risks of valuation and consumer spending, many positive news have already been priced into the stock. Apple's expected P/E ratio is 32 times, close to a new high in three years. Despite some institutions suggesting that Apple's Apple Intelligence may drive hardware upgrades, analysts are still uncertain whether this will happen
According to the Zhitong Finance and Economics APP, on Tuesday, the investment bank Piper Sandler raised its target price for Apple (AAPL.US), but also pointed out that many recent positive news have already been "reflected in the stock price." Analyst Matt Farrell from the bank raised Apple's target price from $190 to $225 and maintained a "neutral" rating on the stock.
In a report, the analyst stated, "From our perspective, this excitement is justified, as artificial intelligence may become a key driver of Apple's hardware upgrades. In addition, the recovery growth in iPhone sales in China may create a positive factor in the second half of the year." "However, considering the current valuation and the increasing risks of consumer spending headwinds, we believe that many positive news have already been reflected in the stock price."
The analyst added that Apple's expected price-to-earnings ratio for the next 12 months is 32 times, reaching a three-year high and approaching a fifteen-year high (35 times); the premium over the S&P 500 index is close to a ten-year high.
Despite many research institutions recently stating that Apple's Apple Intelligence could be a driver for hardware upgrades, Matt Farrell is not certain if this will happen. The analyst said, "So far, we have been hesitant about the consumer use cases of artificial intelligence. From our perspective, we will see a 'super cycle' of Apple Intelligence driving hardware upgrades - as indicated by recent stock price trends, but we are not ready to consider this as a base case yet."