BofA Securities has reaffirmed its buy recommendation for Apple (NASDAQ:AAPL), despite trimming the price target to $253 from $256 due to a less optimistic outlook for iPhone sales. Analysts anticipate that Apple's earnings resilience will be a significant strength as the company prepares for its upcoming January 30 earnings report. The firm projects a robust first fiscal quarter, with revenues expected to reach $126 billion and an estimated 79 million iPhone shipments, slightly surpassing Wall Street’s forecast of 77 million units. However, analysts have revised their second-quarter iPhone shipment expectations downward to 49 million from 56 million, attributing this adjustment to broader economic pressures and slower adoption of new features.
The services division continues to shine as a standout performer for Apple. BofA anticipates a 13% increase in services revenue for the first quarter, with growth expected to remain strong at 14% for the remainder of the year. A notable highlight is the App Store, which reported a 15% year-over-year revenue surge, indicating sustained consumer interest. Additionally, concerns over the Chinese market appear to be overstated, with analysts predicting that regulatory pressures from both the EU and U.S. Department of Justice may ease under the Trump administration. Moreover, the introduction of Apple’s in-house 5G modem in the iPhone SE could potentially enhance profit margins if it proves successful.
Beyond the hardware segment, Apple’s services sector is set to drive substantial growth. The company’s App Store demonstrated impressive performance with a 15% year-over-year revenue boost, underscoring the ongoing demand for digital services. Analysts also express confidence that worries about the Chinese market are exaggerated and expect regulatory tensions to diminish. Furthermore, the potential success of Apple’s self-developed 5G modem in the iPhone SE could offer a competitive edge and improve profitability. Overall, while there are some adjustments to iPhone forecasts, Apple’s diverse revenue streams and resilient financial position remain compelling factors for investors.