Investing.com -- Jefferies upgraded Apple to Hold from Underperform, citing a solid December-quarter outlook and resilient services growth, though it warned the longer-term picture remains muted.

“Apple’s September-quarter revenue grew 7.9% year over year, 6% above our estimate and 1% above consensus,” analyst Edison Lee said.

The firm noted that growth “was mainly driven by 15% service revenue growth,” while product sales rose just 5.4%, led by a 6% increase in iPhone revenue.

Mac revenue grew 13%, while China remained the weakest region, falling about 4% year over year due to supply constraints for the iPhone 17.

Jefferies highlighted that Apple’s “guidance of 10%-12% revenue growth in the December quarter is the first double-digit growth period since 2QFY22,” implying around 10% product revenue growth and 13%-14% services growth. Gross margin is expected between 47% and 48%, including a $1.4 billion tariff cost.

Lee stated that he expects “China revenue growth in 1QFY26 will likely turn positive,” citing accelerated iPhone shipments and strong demand for the base iPhone 17 model supported by “aggressive pricing and government subsidies.”

However, Jefferies cautioned that “earnings upgrade is very limited” and that 2026 growth will be constrained by “a $100 price hike assumed for iPhone 18,” higher upgrade rates from iPhone 17, and “a less favorable product mix.”

“We have raised our revenue and EPS forecasts by low single digits for the next three years,” Jefferies said, with a new price target of $246.99.

The firm concluded, “Stock remains expensive but will likely remain so given the hope for iPhone 18 (especially foldable).”