Apple Inc. (AAPL) is set to release its fiscal second-quarter (Q2) earnings on May 2 after the market closes, with Wall Street analysts anticipating EPS of $1.51 and revenue of $90.83 billion. Ahead of the report, analysts are emphasizing the company’s promising outlook and four primary growth drivers.
BofA Securities analyst Wamsi Mohan has maintained a Buy rating for Apple stock with a price target of $225, representing a potential upside of 36.4%. Mohan’s bullish stance is based on four key catalysts, positioning Apple as a “top pick for 2024”.
These catalysts include:
1. Announcement of capital return at earnings in May
2. Unveiling of generative AI (Gen AI) advancements at the Worldwide Developers’ Conference (WWDC) in June
3. The highly anticipated launch of the iPhone 16 in the fall
4. A steady increase in gross profit dollar growth each quarter
Mohan predicts a strong iPhone upgrade cycle in FY 2025, fueled by demand for advanced hardware that supports Gen AI capabilities. Additionally, he anticipates sustained growth in Apple’s Services revenue segment and improved margins driven by the use of in-house silicon.
The analyst also suggests that the integration of AI features could draw increased institutional ownership of Apple stock, while indicating that any legal hurdles that arise are likely to be manageable.
Regarding the Q2 earnings report, Mohan expects a solid overall performance but cautions that any downward revisions in guidance for F2Q could lead to a pullback in shares.
However, he predicts robust growth and margins in Services revenue, along with the possibility of some Vision Pro sales in the forthcoming quarters. Furthermore, Mohan anticipates a new buyback authorization announcement during the F2Q earnings call, reflecting Apple’s commitment to shareholder returns.