JP Morgan sees Apple returning to growth in Q3, premium valuation is 'sticky'
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Investment firm J.P. Morgan said Apple (NASDAQ:AAPL) is likely to return to growth when it reports fiscal third-quarter results on Thursday, making the tech giant's premium valuation multiple "sticky."
Analyst Samik Chatterjee, who has an overweight rating on Apple (AAPL), boosted his price target to $235 from $190, marking a new high on Wall Street, noting that the company is "well positioned" to drive investor confidence. He has a 30 multiple on fiscal 2025 earnings estimates of roughly $8 per share. 
"Even as Apple cycles past the period of revenue declines that started in F1Q23, and returns to growth again in F4Q23, we expect investors to be further convinced of the resilience of the replacement cycle drivers for the hardware products as well as the diversified growth drivers in Services," Chatterjee wrote in an investor note. 
In addition, Chatterjee noted that Apple (AAPL) has been a "resilient" earnings compounder and is not a product cycle company, citing its diversified revenue drivers in its hardware revenue (iPhone, iPad, Mac) as well as the replacement cycle for roughly 2B installed devices, and its Services business, which generates double digit growth. 
"The inherent diversification that Apple has built into is putting the company in the same league now as other 'earnings compounders' with resilient drivers and is more likely to retain the premium multiple it has been trading at for the last six months, which was earlier considered the high-end of the trading range," he added.
In addition, Chatterjee noted that Apple (AAPL) has been a "resilient" earnings compounder and is not a product cycle company, citing its diversified revenue drivers in its hardware revenue (iPhone, iPad, Mac) as well as the replacement cycle for roughly 2B installed devices, and its Services business, which generates double digit growth. 
"The inherent diversification that Apple has built into is putting the company in the same league now as other 'earnings compounders' with resilient drivers and is more likely to retain the premium multiple it has been trading at for the last six months, which was earlier considered the high-end of the trading range," he added.
Apple (AAPL) is slated to report fiscal third-quarter results on Thursday. A consensus of analysts are forecasting Apple to earn $1.19 per share on $81.82B in revenue.
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