On Tuesday, BofA Securities maintained a positive stance on Apple Inc. (NASDAQ:AAPL), reiterating a Buy rating and a $230.00 price target.
The firm's analyst highlighted Apple's recent financial moves, including the authorization of an additional $110 billion for share buybacks, surpassing the analyst's expectation of $90 billion. This authorization marks the largest share buyback in Apple's history. Additionally, in the same quarter, Apple increased its dividend by 4% to $0.25 per share.
During the second fiscal quarter earnings call, Apple's management shared the news about the share buyback program. The increase in dividends and the buyback program underline Apple's financial strength and commitment to returning value to its shareholders.
Apple's financial decisions come at a time when Warren Buffet's Berkshire Hathaway (NYSE:BRKa) (BRK) has reduced its stake in the technology giant. At the end of March, BRK's holding in Apple dropped to $135.4 billion from $174.3 billion at the end of December, indicating a sale of approximately 115 million shares during the quarter.
Warren Buffet, at Berkshire Hathaway's Annual General Meeting, attributed the reduction in his company's stake in Apple to tax considerations. Despite this sell-off, Buffet expects Apple to remain the largest holding in BRK's portfolio by the end of the year. This sentiment reflects confidence in Apple's ongoing performance and strategic position in the market.
BofA Securities' analyst remains optimistic about Apple's future, citing the company as a beneficiary of "GenAI at the edge," which refers to the next generation of artificial intelligence technologies at the consumer level. The analyst also notes the potential for gross margin (GM) upside and momentum in Apple's services sector.
The price objective of $230 is based on a 30 times multiple of the calendar year 2025 earnings per share (EPS) estimate of $7.76.
InvestingPro Insights
As BofA Securities maintains its bullish outlook on Apple Inc. (NASDAQ:AAPL), the latest data from InvestingPro provides additional context to the company's financial health and market position. InvestingPro Tips highlight Apple's aggressive share buyback strategy and a consistent track record of raising dividends, with the dividend increasing for 13 consecutive years. This aligns with the recent financial moves mentioned by BofA Securities, reinforcing Apple's commitment to shareholder returns.
InvestingPro Data further enriches this perspective, showing Apple's substantial market capitalization of $2830.0 billion and a P/E ratio of 28.09, which, while high, may be justified by the company's dominant position in the Technology Hardware, Storage & Peripherals industry. Despite a slight revenue decline of -0.9% over the last twelve months as of Q2 2024, Apple maintains a robust gross profit margin of 45.59% and an operating income margin of 30.98%, indicating efficient operations and strong profitability.
For readers interested in deeper financial analysis and additional insights, there are more InvestingPro Tips available that can be accessed by visiting the Apple page on InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to explore these insights, including tips on Apple's valuation multiples and analysts' earnings revisions.
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