Bank of America maintained a buy rating and $230.00 price target on Apple on Wednesday, even after the launch of the tech giant’s latest products. The event, which was held on Sunday, showcased the new versions of the iPad Air, iPad Pro, Pencil Pro and Magic Keyboard.
Apple stock closed Wednesday’s session at $182.74, which means it can rise by about 25.9% if it reaches the BOFA target.
The BofA Securities analyst highlighted Apple’s continued innovation, especially with its semiconductor chips, pointing to the introduction of the new M4 chip in the iPad Pro. The new chip from Apple has an advanced neural engine to enable artificial intelligence functions. This includes capabilities such as isolating subjects from their background in 4K video using Apple’s Final Cut Pro, as well as document detection to rearrange frames and remove shadows in images.
Furthermore, the analyst appreciated new features in iPadOS that allow for visual and live text search and topic optimization. These updates are consistent with Apple’s commitment to improving the user experience and software capabilities.
During an earnings call last week, Apple management indicated that iPad revenue for the fiscal third quarter of 2024 is expected to grow by double digits, recovering from a 17% year-over-year decline in the fiscal second quarter. This expected growth is due in part to sales of the newly launched iPads, which were available to order on Sunday and will be in stores on Wednesday, May 15.
Despite this, BofA Securities did not change its estimates or price target for Apple shares, indicating that the company, as a beneficiary of generative artificial intelligence, is still on the edge, with the potential for a rise in gross profit margin and continued momentum in its services sector.
According to InvestingPro, Apple has demonstrated a consistent commitment to achieving shareholder returns, as evidenced by 12 years of increased profits, which is evidence of its financial stability and investor-friendly approach. In addition, Apple’s one-week total return of 7.74% confirms the positive reception in the market after the launch of the latest product and the optimism in profits.
While the massive $110 billion stock buyback program — the company is maintaining a generous dividend for the 13th straight year — reflects management’s confident outlook on the company’s financial health and future prospects.
