Evercore ISI Reaffirms Apple as Top IT Hardware Pick with $365 Target

Investment firm Evercore ISI has reaffirmed Apple Inc. (NASDAQ:AAPL) as its top selection in the IT Hardware & Networking sector, maintaining an Outperform rating and a $365 price target. The analysis follows Apple's latest quarterly earnings report, which the firm views as solid despite identified headwinds from supply chains and component costs.

Key Earnings and Guidance

Apple reported June quarter results that were largely in line with analyst expectations, according to the source. The tech giant posted revenue of $109.4 billion and earnings per share (EPS) of $1.91, slightly ahead of Wall Street consensus estimates of $109.0 billion and $1.89, respectively.

The company's overall revenue grew 16% year-over-year. This performance was primarily driven by strong growth in its iPhone and Mac segments, which saw sales increase by 22% and 29%, respectively. However, the Services division experienced more moderate growth at 12%.

Looking ahead, Apple guided for September quarter sales growth in the range of 9% to 11%. This forecast implies an approximate EPS of $1.97, as noted by Evercore's analysis.

Analyst's Assessment

In its note, Evercore ISI highlighted several key factors influencing Apple's performance and outlook. The firm identified both significant strengths and notable pressures facing the company.

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Key points from the analysis include:

• Supply Constraints: Ongoing supply issues affecting iPhones, Macs, and iPads are expected to create a $3.0 billion headwind in the September quarter, equivalent to a 250 basis point impact.
• Margin Pressure: Rising memory costs negatively impacted gross margins by 120 basis points in the reported quarter.
• Services Deceleration: The slowdown in Services growth was attributed partly to softness in the App Store's gaming category.
• China Strength: Revenue from Greater China provided a bright spot, growing by an impressive 22%, marking the third consecutive quarter of over 20% growth.

Future Catalysts and Market Context

Despite the challenges, Evercore ISI suggested that Apple's forward guidance may contain a degree of conservatism. The firm sees several potential upside catalysts on the horizon, including the upcoming iPhone 18 launch, the rollout of new Siri AI features, and an expected acceleration in the Services and Wearables categories.

The note from Evercore ISI comes amid a mixed reaction to Apple's results from the broader analyst community. According to reports, while TD Cowen raised its price target, Goldman Sachs lowered its own due to the guidance, and KeyBanc reiterated an Underweight rating on valuation concerns.