by frantic00 via iStock

Apple Inc.'s (AAPL) revenue was up 8% YoY for the quarter and fiscal year ending Sept. 27, 2025. Its free cash flow surged 10.8% YoY to almost $99 billion and up 8.5% QoQ. As a result, using a 25% FCF margin and a 2.5% FCF yield metric, AAPL stock could be worth over 20% more.

That puts AAPL on a price target of $325 over the next 12 months (NTM). AAPL closed at $270.37 on Friday, Oct. 31. This article will explain the AAPL price target.

(Click on image to enlarge)

AAPL stock - last 3 months - Barchart - Oct. 31, 2025

Strong Revenue Growth and High FCF Margins

Apple reported that its product and service revenue rose 7.94% to $102.466 billion. Moreover, its service revenue reached a record $28.75 billion, accounting for 28% of total sales. Apple has been trying to get away from its overdependence on iPhone sales, which hit an all-time high in the September quarter.

As a result, its cash flow surged. For example, free cash flow (FCF) hit $26.486 billion in its fiscal Q4 for the quarter ending Sept. 27. That was up 10.8% over last year's $23.9 billion, according to Stock Analysis.

Moreover, that FCF represented a 25.85% margin on fiscal Q4 sales of $102.466 billion. This was even after its capex spending rose 11.5% YoY.

For the full fiscal year ending Sept. 27, Apple generated almost $99 billion in free cash flow (i.e., $98.767 billion) on revenue of $416.16 billion for the year. That represented a slightly lower FCF margin of 23.74% (i.e., $98.8b / $416.2 b), due to lower Q1 and Q2 FCF margins.

As a result, we can forecast strong FCF going forward.

Forecasting FCF and AAPL Price Target

For example, analysts are now projecting that revenue for the year ending Sept. 2026 will rise 8.8% to $452.9 billion and up +5.7% for the next fiscal year to $477.97 billion.

So, the next 12 months (NTM) revenue forecast is:

 (0.75 x $452.9b) + (0.25 x $477.97b) = $339.675b + $119.4925b = $459.1675 billion NTM

As a result, if we assume that the fiscal Q4 FCF margin of 25.85% persists throughout the next year:

0.2585 x $459.2 billion NTM sales = $118.7 billion FCF

That would be almost 20% higher than the $99 billion it generated for the year ending Sept. 27, 2025. This could lead to a significantly higher stock price.

For example, with Apple's $4 trillion market cap as of Friday, the FCF represents a 2.469% FCF yield (i.e., $98.767 billion FCF/$4,000 billion = 0.02469).

So, applying this to the NTM FCF forecast:

$118.7 billion / 0.02469 = $4,808 billion market cap

That represents a 20.2% gain over its existing market cap of $4 trillion.

In other words, the price target is 20.2% higher:

$270.37 x 1.202 = 324.98

In other words, the rounded price target is $325 per share.

One way to play this is to set a lower potential buy-in point by shorting out-of-the-money puts. That way, an investor can get paid while waiting to buy AAPL at a lower price.

Shorting AAPL OTM Puts

For example, the $260 strike price put option for the Dec. 5 expiry period has a $3.53 midpoint premium. That exercise price is 3.8% below Friday's close and represents an immediate yield for the short-seller of these puts of about 1.36% for the next month:

$3.53 / $260.00 = 0.013576 = 1.358% one-month yield

(Click on image to enlarge)

AAPL puts expiring Dec. 5, 2025 - Barchart - As of Oct. 31, 2025

This allows the investor to potentially buy into AAPL at $360 - $3.53, or $256.47, or -5.14% below the Oct. 31 trading price, should AAPL fall to $360.00 over the next month.

The risk, on the downside, is that AAPL could fall further than the $256.47 breakeven. That could potentially result in an unrealized loss. 

However, note that the delta ratio is low at just -0.27. That implies just a 27% chance that AAPL will fall to $260.00 over the next 34 days, even though it's only 3.84% below Friday's close.

Moreover, even if this occurs, the investor could always do another short-put trade. Or the investor could sell out-of-the-money covered calls to help mitigate any unrealized loss.

In addition, the upside from owning shares at the breakeven price of $256.47, given my $325 price target, would be even higher - i.e., +26.7%.

The bottom line is that AAPL stock looks at least 20% too cheap here. One way to set a lower buy-in point and get paid while waiting for this to happen is to short out-of-the-money put options in one-month away expiry periods.

More By This Author:

Amazon's Revenue Beat Surprises Analysts And Its Cash Flow Surges (Not FCF) - AMZN Stock Could Still Be Undervalued
Huge, Unusual Options Activity In Nokia After Nvidia Takes $1 Billion Stake
IBM Raises Its FCF Outlook For 2025 - IBM Stock Could Be Undervalued