Apple, HP Stocks Diverge In Premarket After Analyst Nudges Up Price Targets But Expresses Wariness Over Valuation: Retail Mood Toward Tech Giant Lifts
Bernstein said the IT hardware sector is “structurally challenged” and sees stocks in its coverage universe as trading stocks rather than long-term holdings.
FollowApple, Inc. ($AAPL) and HP, Inc. ($HPQ) shares took divergent routes in premarket trading on Friday following Bernstein's upward revision of its price targets for both IT hardware stocks.
Bernstein raised its price target for Apple to $260 from $240 and that for HP to $34 from $32 as part of its 2025 outlook for the IT hardware sector, TheFly reported. The price target tweaks suggest an upside potential of 6.62% and 4.71% for Apple and HP, respectively.
The firm said the IT hardware sector is “structurally challenged” and it sees stocks in its coverage universe as trading stocks rather than long-term holdings.
While Bernstein is positive about the IT spending backdrop for 2025, with many companies having a stronger portfolio than their historical norms, it is apprehensive about stock valuations, which currently trended at the higher end. The firm also flagged challenging artificial intelligence (AI) profitability and lackluster personal computer (PC) refresh cycle in 2024.
The firm's top IT hardware picks entering 2025 remain Apple and Dell Techologies, Inc. ($DELL).
Analysts at the firm adjusted their price targets for Apple and HP following their stock appreciating to their previously set targets.
Bernstein said Apple is increasingly a platform business, which has made it a “quality compounder,” with mid-single-digit revenue growth, improving margins, disciplined capital returns and double-digit earnings growth. Notwithstanding the positives, the valuation appears “full,” it added.
Bernstein’s outlook comes a day after UBS analyst David Vogt reduced his December quarter revenue estimates for Apple, citing soft November iPhone sell-through. The stock fell 2.62% on Monday amid the report and the broader market weakness.
Apple stock gained an in-line 31% gain for 2024, while HP rose a more modest 1%.
AAPL sentiment and message volume January 3, 2025, premarket as of 6:22 am ET | Source: Stocktwits
On Stocktwits, retail sentiment toward Apple stock improved to ‘bullish’ (67/100) from ‘neutral’ a day ago, with message volume improving to ‘high’ levels.
In premarket trading, Apple edged down 0.12% at $243.55 as of 6:22 a.m. EDT, while HP stock was up 0.18% at $32.53.
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