Goldman Sachs raises its price target for Apple, citing overall market momentum

Tim Cook Apple App StoreApple CEO Tim CookAP

  • Goldman Sachs upgraded its Apple price target to $187 per share, up from $171, attributing the boost to updated calculations that reflect the S&P 500's price-to-earnings ratio.
  • Apple stock last closed at $204.50 per share.
  • The investment bank also warned of lagging App Store revenues that could bite into Apple's Services sector in its next earnings report.
  • Watch Apple trade live here.

Goldman Sachs upgraded its 12-month price target for Apple stock Wednesday on grounds of bolstered market strength.

The investment bank raised its Apple price target to $187 per share, up from $171. Apple closed Tuesday at $204.50 per share, roughly 9.4% higher than Goldman's revised target.

The reasons for increased price target stem from updated calculations that better reflect the S&P 500's current price-to-earnings multiple, analysts for the bank said.

Tuesday's market close marked the end of a five-day streak of new highs for the index, a surge sparked by hints from Fed chair Jerome Powell that the central bank will cut interest rates in July. The Dow Jones Industrial Index and Nasdaq Composite also hit record highs following Powell's congressional hearing.

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The Cupertino-based company saw deceleration in its App Store revenues throughout June, hinting at its Services sector to disappoint throughout the quarter, according to the analyst note. If June's lower figures persist, the analysts said year-over-year Services revenue would sink to 14%, below FactSet's consensus estimate of 16.6%.

Better-than-expected iPhone demand and an increased dividend are the most likely ways for the tech company to please investors in its next quarterly report, Goldman's analysts said. The tech company's downside risks include weakened iPhone sales and costly acquisitions.

This year's lower demand for iPhones has captured Wall Street's attention. Apple issued its first sales warning in over a decade in January, attributing its lowered revenue estimates to lagging phone sales, particularly in China. The company's stock fell about 8% in after-hours trading following the announcement.

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