Apple Stock Has Slipped, but AI Looks Like a Catalyst, Says J.P. Morgan — Barrons.com

Emily Dattilo

Apple stock is having a rough year, but sentiment is beginning to improve, J.P. Morgan argued.

Analysts led by Samik Chatterjee trimmed their December 2024 price target to $210 from $215 and reiterated an Overweight rating on shares of the iPhone maker in a Thursday research report.

Fundamentals have been weighing on the stock, including slowing iPhone sales in China, and the company stepping back on its plans for a car, analysts explained.

The new $210 price target is based on a multiple of about 29 times J.P. Morgan’s calendar 2025 earnings estimate, “but implies a more reasonable” 25 times multiple of the analysts’ fiscal 2026 earnings estimate, “which is more in line with the multiple the shares have traded at following the 5G [wireless] cycle momentum.”

There are reasons to remain bullish on the shares, J.P. Morgan noted.

First, the valuation premium is settling — with Apple shares down about 13% this year, they’re now trading around 25 times the consensus estimate for earnings per share over the next 12 months, which is at the lower end of the range of where shares have traded since the launch of the 5G phone.

Second, all eyes are on the company’s plans for artificial intelligence — expected to be disclosed at its annual Worldwide Developers Conference in June — and what that would mean for the phones.

“The increasing appetite from investors has largely been driven by interest in participating in the cyclical upsides associated with the AI on-device led upgrade cycle, with investors taking the cue from the 5G-led upgrade cycle,” the J.P. Morgan analysts wrote.

Apple stock was edging 0.5% higher to $168.69 in premarket trading Thursday, while futures tracking the S&P 500 were off 0.1%.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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