Apple stock trades above consensus target ahead of Oct. 29 earnings

Apple shares trade at $336.64, exceeding the Wall Street consensus price target of $328.09, as the company prepares to report fiscal fourth-quarter results on October 29. The stock has risen 24.17% year to date, outperforming the S&P 500's 14.17% gain over the same period.

In its fiscal third quarter, Apple reported revenue of $109.42 billion, a 16.4% increase from the prior year. Earnings per share reached $2.02, surpassing the $1.89 consensus estimate. iPhone revenue grew by 22%, while Mac revenue increased by 29%. Management attributed the performance to demand outpacing supply, stating that the iPhone and Mac performed better than anticipated.

Valuation metrics indicate the market is pricing in strong future growth. Apple’s trailing earnings multiple stands at 39, with a PEG ratio of 2.706. Analysts project fiscal 2027 earnings per share of $9.5758, up from $8.8202 in the prior year. Potential drivers for this growth include the Siri AI rollout, paid iCloud Plus upgrades, the Apple Upgrade leasing program, and a $100 billion buyback authorization.

However, margins currently benefit from one-time tariff refunds. These refunds added approximately two percentage points to the 50.1% gross margin and 11 cents to earnings per share in the last reported quarter. Management described memory pricing as a "100-year flood" and expects supply constraints to increase significantly. September-quarter guidance for gross margins of 47% to 48% also relies on refund support.

Analyst sentiment has shifted downward recently. Over the past 30 days, 14 analysts lowered their fiscal fourth-quarter earnings per share estimates, compared to seven who raised them. The consensus earnings per share for the upcoming quarter is $2.9059. The average price target of $328.09 implies about 2.5% downside from current levels.

Despite beating estimates in eight consecutive reports, Apple stock has fallen after each earnings release, averaging a -1.53% move on earnings day. Last quarter, the stock dropped 7.35% despite a 6.8% earnings surprise. The shares are trading near their 52-week high of $345.34.

The upcoming report will focus on December-quarter guidance, gross margins excluding refunds, supply chain commentary, and Siri AI approvals in the European Union and China. These factors will determine if the current valuation is sustainable or if memory costs and supply issues will pressure future results.