TheChek News Flow

JP Morgan raises their AAPL tgt to $245 from $225. Analyst Samik Chatterjee said, "We are updating our volume forecasts for the iPhone 16 and iPhone 17 cycle following the WWDC event, which laid out a collection of AI features that in our view will drive an upgrade cycle that starts with the iPhone 16 launch (primarily FY25 impact to financials) followed by a cycle peak with the launch of iPhone 17 (primarily FY26 impact to financials). We are raising our iPhone volume expectations to 250 mn units in CY25 (244 mn in FY25) and 275 mn in CY26 (268 mn in FY26), led by our expectations for an upgrade cycle for AI-capable iPhones, while still incorporating: 1) conservative replacement rates relative to the recent 5G cycle; 2) 2-year ramp to peak volumes and revenues as witnessed in the 5G cycle; although, in this case we expect a more robust step-up year-over-year in both FY25 and FY26, while 5G benefitted from pull-through of demand into FY21 (Year-1 of 5G phones); and 3) backward compatibility of AI features on iPhone 15 Pro/Pro Max also support in principle a bigger upgrade cycle in FY26 when we also expect more significant hardware upgrades. In addition to the tailwinds in relation to the iPhone upgrade cycle, we are raising our estimates modestly for Services growth, led by expectations for higher Services monetization through third-party AI applications in the coming years. The combination of the above leads us to raise our FY25E and FY26E estimates to $8.10 and $9.69, respectively, relative to consensus expectations for $7.26 and $7.64 for FY25E and FY26E, respectively. While buy-side estimates are clearly higher than sell-side estimates following the WWDC event, which served to raise investor expectations around an upgrade cycle with broad-based proliferation of AI enabled features across native apps, we still see further upside to the shares that are valued at ~22x on our FY26E estimates relative to a more appropriate 25x in our view. However, our updated model only incorporates AI led upsides to iPhone volumes, and we envision further potential upsides in the form of upgrades to the iPad and Mac devices from AI led capabilities. We are raising our Dec-24 price target to $245 (vs. $225 prior) on our higher estimates."