BofA Sees AAPL Surge Under Ternus, Predicts 20% Upside

Bank of America's (BofA) outlook on Apple stock suggests that AAPL could experience significant growth under new CEO John Ternus, who takes over from Tim Cook on September 1. The bank maintains its Buy rating and price target at $380, which represents a potential 20% upside from the current price of $309.35.

BofA analyst Wamsi Mohan believes that Apple will shift towards more aggressive spending on research and development (R&D), capital expenditures, and acquisitions under Ternus' leadership. This could lead to new product categories such as AI glasses, camera-equipped AirPods, smart rings, home automation, and robotics.

Cook's tenure has been marked by significant growth, with Apple's market value increasing from around $350 billion in 2011 to over $4.5 trillion today. Free cash flow has also risen from $33 billion to nearly $137 billion, while sales have grown from $108 billion to $416.2 billion.

Warren Buffett, one of Apple's largest shareholders, has described Cook as 'one of the best managers in the world'. BofA's price target is based on 37 times projected 2027 earnings of $10.32 per share, which is above Apple's five-year range of 19 to 35 times.

However, there are risks associated with this outlook, including slower Services growth, longer iPhone cycles, tougher competition, and soft consumer spending.