On Tuesday, Melius reiterated his Buy rating and $265.00 price target on Apple Inc. (NASDAQ:). The company’s outlook remains positive as Apple prepares for a CFO transition, with Kevan Parekh set to take over on January 1, 2025. Luca Maestri, who recently celebrated 10 years of service, will take over as head of Corporate Services.
Luca Maestri’s legacy includes Apple’s effective cash return strategy and expansion into services, which were key pillars of the company’s investment thesis. Under his leadership, Apple’s earnings calls became a reliable source of data, and the company was able to significantly improve its disclosures on its installed base and paid subscriptions. The analyst noted that these practices are expected to continue under Parekh, who has been part of the team for ten years.
Apple’s financial health is underlined by free cash flow, which has consistently exceeded net income. During Maestri’s tenure, the share count was reduced by 35%, and Apple’s partnership with companies like OpenAI has enabled efficient investment management. The company’s aggressive share buyback strategy, which saw $29 billion worth of buybacks in the June quarter alone, is expected to continue and could see the company exceed $30 billion per quarter.
Looking ahead, the firm believes Apple’s new CFO can support significant dividends and buybacks over the next three years, coinciding with a multi-year upgrade cycle for iOS devices. The $265 price target is based on 30 times forecast FY26 earnings per share of $8.70, which the analyst said could be a conservative estimate.
In other recent news, Apple Inc. has announced a major change within its leadership team. Luca Maestri, the company’s Chief Financial Officer (CFO), is expected to step down from his post on January 1, 2025. Kevan Parekh, currently Vice President of Financial Planning and Analysis at Apple, is set to take over as CFO. This change is part of a well-structured succession plan designed to ensure a smooth transition.
Several analyst firms, including Evercore ISI, Citi, JPMorgan and Morgan Stanley, have maintained their respective ratings and price targets on Apple stock. These firms expect the transition to be smooth and that there will be no major strategic changes at the company. They also expect Apple to continue its focus on share buybacks, dividends and selective mergers and acquisitions.
At the same time, Apple announced changes to its corporate charter to refine the process for shareholder proposals and board nominations.
InvestingPro Insights
As Apple Inc. (NASDAQ:AAPL) gets a new CFO, the company’s financial stability remains of interest to investors. Data from InvestingPro puts the company’s market capitalization at an impressive $3.45 trillion, underscoring its status as a tech giant. With a P/E ratio of 34.28 and a slightly lower trailing twelve-month adjusted P/E from Q3 2024 of 33.88, the company’s valuation is high, which could reflect investor confidence in its continued growth and profitability.
Two tips from InvestingPro that align with the sentiment of the article are the fact that Apple has increased its dividend for 12 consecutive years and that 18 analysts have upgraded their earnings forecast for the coming period. This suggests a strong track record of creating value for shareholders and an optimistic outlook on the company’s financial performance. For those who want to dive deeper into Apple’s financials, InvestingPro offers additional tips and insights at https://www.investing.com/pro/AAPL.
The analyst’s expectation of continued support for significant dividends and share buybacks is further supported by Apple’s dividend growth history, which has shown a 4.17% increase over the past twelve months. In addition, Apple’s robust free cash flow and efficient investment management, as demonstrated by its partnership with companies like OpenAI, will likely sustain its aggressive share buyback strategy. With the company’s financial health at the forefront, these insights from InvestingPro can provide valuable context for investors tracking Apple’s financial strategies under new financial leadership.
This article was created with the help of AI and reviewed by an editor. For more information, see our Terms and Conditions.
