Bank of America reiterated its Buy rating and $380 price target on Apple on July 30, arguing that production shortages, not softening demand, explain the company's cautious September-quarter guidance. Analyst Wamsi Mohan raised his earnings estimates for the next three fiscal years after flagging a one-time tariff refund inside Apple's June-quarter results.
Bank of America is standing behind Apple stock, telling investors a supply squeeze, not weakening demand, explains its conservative outlook.
Analyst Wamsi Mohan reiterated his Buy rating and $380 price target on Apple on July 30, roughly 14% above that day's $333.43 close.
Why the June quarter looked weaker than it was
Apple reported Q3 2026 revenue of $109.4 billion, up 16% from a year earlier, with EPS of $2.02. Bank of America flagged that about $0.11 of that figure came from a tariff refund. Strip that out, and earnings landed roughly in line with analyst projections rather than beating them.
September-quarter guidance of 9% to 11% revenue growth struck some investors as modest. But Bank of America argues the figure reflects what Apple can manufacture, not what consumers want to buy, pointing to production shortages on iPhones, Macs, and iPads tied to tight supply of the advanced semiconductor nodes used in Apple's custom chips.
iPhone demand holds, channel inventory stays lean
iPhone revenue reached $54.2 billion in the June quarter, up 22% year over year, with the installed base and June-quarter upgraders both hitting records. Management said demand exceeded its own internal expectations and reported no evidence that customers pulled purchases forward ahead of anticipated price increases — a signal Bank of America reads as confirmation that iPhone demand is genuine.
Apple also exited the quarter with unusually lean channel inventory and expects it to stay low through September. Retailers will therefore need to restock once supply improves and new iPhones launch this fall.
Other segments and the case for $380
Mac revenue rose 29% year over year on strength in MacBook Pro and MacBook Neo sales, while iPad revenue fell 6% against an unusually strong prior-year comparison. Wearables revenue increased 6%, with Apple Watch setting installed-base and upgrade records. Services grew 12% to $30.7 billion, slightly below Bank of America's expectations, pressured by slower mobile gaming and a tough year-over-year comparison against last year's F1 movie release.
Bank of America raised its FY2026 EPS estimate to $8.85 from $8.63 and now projects $9.92 in FY2027 and $10.95 in FY2028. The $380 target rests on a valuation of 37 times expected calendar-2027 EPS of $10.32, which Mohan argues Apple deserves given a multi-year iPhone upgrade cycle, growing AI opportunities, and continued Services expansion.
Apple generated $34.4 billion in operating cash flow during the June quarter and ended the period with approximately $62 billion in net cash. It returned $25.8 billion through share buybacks and about $4 billion in dividend payments, a capital-return program Bank of America called one of the most consistent in the market.
Source: TheStreet
Trading involves risk.
Risk Disclaimer
