Bank of America believes that tech giant Apple (AAPL) offers a good risk-to-reward setup for investors now that its price-to-earnings (P/E) ratio has dropped below 25 times. Five-star analyst Wamsi Mohan pointed out that Apple stock has fallen sharply—down 25% year-to-date and 23.5% since its last earnings—compared to a 13.7% and 16.6% drop in the S&P 500 (SPY) over the same periods. The selloff is due to concerns like tariffs and delays to Siri updates.
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However, Mohan said that it presents a strong buying opportunity for a high-quality company. As a result, he maintained a Buy rating and a $250 price target on the stock. Interestingly, Mohan also noted that when Apple’s P/E falls below 25, it tends to rebound well. Historically, the stock has delivered returns of 7% in three months, 8% in six months, 14% in nine months, and 17% over a year following such events. While there were some short-term declines—5% to 11% drops in April and August 2022—those were followed by strong rebounds ranging from 11% to 26%.
Nevertheless, Mohan warned that risks still remain. Indeed, ongoing geopolitical tensions and rising tariffs—especially for China—could further pressure Apple’s earnings outlook. However, he said Apple has the tools to manage these risks, like shifting more iPhone production to India, raising prices on products and services, negotiating better deals with suppliers, launching higher-priced devices, and adjusting product release schedules.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 17 Buys, 11 Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $247.28 per share implies 39% upside potential.