Apple’s price target cut at J.P. Morgan on moderation of revenue/earnings, macro headwinds

J.P. Morgan maintained its Overweight rating on Apple (NASDAQ:AAPL) but lowered the price target on the stock to $230 from $240 citing medium-term moderation of revenue/earnings and macro led headwinds.

Analysts led by Samik Chatterjee said they have updated their revenue and earnings forecast to reflect the effect of near term pull ahead of consumer demand on iPhones, driving a moderation in demand drivers in the back-half of the year, mainly in the backdrop of an iPhone 17 lineup launch that is expected to be only incremental.

The analysts added that they are are moderating their forecasts for demand for the iPhone 17 series due to continuing macro uncertainty and modest digestion following pull-forwards in demand aided by purchases ahead of expected tariff-led price increases as well as consumer spending support through smartphone subsidies in China.

The analysts noted that their more bearish view in relation to the volume outlook for iPhone 17 series is with their unchanged expectations for a stronger cycle in iPhone 18 series with the launch of a foldable smartphone, and further progress in relation to AI features that have been long-awaited and delayed relative to initial investor expectations.

The analysts said that their update translates into a moderation of their growth expectations for fiscal year 2026 to only a modest single digit pace before setting up for a stronger pace of revenue growth in fiscal 2027 which will form the basis of the investment thesis for investors looking to participate in the AI edge adoption led upsides.

Separate to demand drivers, Chatterjee and his team continue to expect that Apple’s swift change in iPhone assembly supply chain to India relative to China to service U.S. iPhone demand, is likely to limit headwinds related to gross margins compared to initial concerns seen by investors.

However, at the same time, the analysts expect tariffs to drive the company to take price increases which will limit volume drivers for the upcoming iPhone 17 cycle.

The analysts noted that along with their lower earnings estimates, they are also lowering their valuation multiple to modestly below the current trading multiple to reflect the likelihood of downside to earnings estimates in the medium term.

The near-term demand drivers remain robust, in part, due to support from subsidies in China, and positions Apple to report robust results for the third quarter of fiscal 2025, the analysts added.