On Tuesday, BofA Securities confirmed its positive stance on Apple Inc. (NASDAQ:AAPL), maintaining a Buy rating with a steady price target of $225.00. The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.
Today, Apple's iPhone offerings span a wide price range, from $429 to $1,599, catering to various consumer segments.
The firm observed that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. Concurrently, prices for previous models are typically reduced by about $100 with each new release. This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023.
Despite experiencing slower unit sales, Apple has effectively shifted its sales mix towards higher-value units. This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. The firm also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.
The analyst's endorsement of Apple's stock is further supported by the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion. These factors collectively underpin the firm's confidence in Apple's continued success and justify the reiterated Buy rating.
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