3 reasons why investors should remain bullish on Apple stock: Needham

Investing.com -- Needham & Company analysts provided three key reasons why investors should remain bullish on Apple (NASDAQ:AAPL ) stock despite concerns about its dependence on the iPhone.

The firm maintained a Buy rating on the stock in a note Tuesday, with a target price of $260 per share, representing a 16% upside.

A Liquid Stock During Uncertainty:The analysts note that while competitors like Amazon (NASDAQ:AMZN ), Google (NASDAQ:GOOGL ), Microsoft (NASDAQ:MSFT ), and Meta (NASDAQ:META ) are heavily investing in generative AI (GenAI) infrastructure with no immediate revenue boost, Apple stands out as a stable and liquid stock.

In a volatile market, they argue that investors need a reliable stock to "hide in" during 2025, making Apple an attractive option.

Share Repurchases Driving EPS Growth:Needham says Apple is actively reducing its equity base through share buybacks, which is expected to drive earnings per share (EPS) growth.

The company's $110 billion share repurchase authorization from May 2024 is projected to lead to 11% EPS growth in fiscal year 2025 and 12% in 2026 , according to Needham estimates . This continued buyback strategy is expected to support the bullish outlook for Apple .

Strong Cash Position Enables Further Buybacks:Needham believes Apple's commitment to achieving "net cash zero" from its current net cash position of about $50 billion, along with $91 billion in cash from operations reported in the first nine months of fiscal year 2024, suggests accelerated share repurchases in the near future .

This financial strategy is expected to further enhance shareholder returns.

Despite concerns about Apple's reliance on the iPhone and its slower pace of GenAI adoption compared to peers, Needham & Company believes Apple's financial discipline and stock buyback strategy make it a strong investment opportunity.

Source: Investing.com