On Monday, Jefferies maintained a Hold rating on Apple Inc. (NASDAQ:AAPL) shares with a steady price target of $211.84. Trading near its 52-week high of $237.81 and with a market capitalization of $3.59 trillion, InvestingPro analysis suggests the stock is currently overvalued.
The firm's analysis highlighted recent developments in China, where two provinces have initiated government subsidies of 15% on smartphone purchases, a move that notably does not exclude Apple products. This decision is seen as part of China's strategy to mitigate the effects of any potential increases in US tariffs.
The subsidies are anticipated to broaden over time, providing a supportive backdrop for smartphone sales within the country. With annual revenue of $391 billion and a healthy gross profit margin of 46.2%, Apple maintains a strong market position. However, there is a contrasting issue that could impact Apple's performance in the Chinese market.
Reports indicate that the upcoming iPhone 17 Slim may lack the space to include physical SIM card slots. This design change could limit Apple to selling only three iPhone models in China next year, potentially resulting in a loss of 2 to 3 million units.
Despite these contrasting factors, Jefferies' position on Apple's stock remains unchanged. The potential expansion of the subsidy program in China could be a positive driver for Apple's sales, while the physical SIM card issue presents a challenge that the tech giant will have to navigate.
The current price target suggests that Jefferies sees limited upside to the stock at present, reflecting a cautious stance amid the unfolding situation. Apple's stock performance will likely continue to be influenced by both the subsidy-related tailwinds and the potential sales impact of the iPhone 17 Slim's design choices in the coming year.
In other recent news, Apple Inc. is making significant strides in the tech industry. The company recently reported a record-breaking total revenue of $94.9 billion for the final quarter of its Fiscal Year 2024, driven by a 6% growth in iPhone sales and a notable $25 billion in revenue from services.
Apple is also focusing on the development of advanced AI features, with Wedbush Securities maintaining a positive outlook on the company and reiterating an Outperform rating.
In addition, Apple is preparing for the launch of its 18.2 software update, which includes a suite of AI features, and is expected to be available to users soon. The company is also planning to expand its services into new markets, notably with the anticipated launch of Apple Intelligence in China.
Morgan Stanley (NYSE:MS) has reaffirmed its positive stance on Apple, maintaining an Overweight rating, and citing an uptick in near-term iPhone upgrade rates in the U.S and China. Further, Apple is developing an enhanced version of Siri, aiming to offer more natural, conversational interactions, similar to the capabilities seen in OpenAI's ChatGPT. These are recent developments that highlight Apple's ongoing commitment to growth and innovation.
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