Estimates raised on Wall Street as Apple impresses investors again with another record quarter

Posted:
in AAPL Investors edited April 2015
The iPhone continues to drive growth at Apple, once again propelling the company to a record quarter that has left analysts on Wall Street confident the company's stock will continue to go higher.


The New York Stock Exchange, credit Carlos Delgado via Wikipedia.


Following Apple's blockbuster March quarter, in which it sold 61.17 million iPhones and earned $13.57 billion in revenue, analysts issued their reactions, and AppleInsider offers a roundup of some of the highlights.

RBC Capital Markets

"Don't get altitude sickness yet," analyst Amit Daryanani said in a note to investors, "We are going higher."
Following Apple's March quarter, price targets were raised by RBC, Morgan Stanley, Piper Jaffray, Brean Capital, and Wells Fargo.
Following the March quarter results, Daryanani raised his price target on shares of AAPL to $150, up from his previous target of $142.

He sees sustained iPhone momentum, room for gross margin improvements, a potential revamped Apple TV, and contributions from the Apple Watch all propelling the stock in the near term.

"AAPL reported another blowout quarter across the board and we think fundamentals are going to get better from here," he said.

Morgan Stanley

While the iPhone continues to be the "main attraction" at Apple, analyst Katy Huberty told investors that she believes there is "more to come" from the world's largest company.

Accordingly, she has also increased her price target to $166, up from a previous prediction of $160.

In particular, Huberty noted that with only 20 percent of the current iPhone installed base upgraded to the latest iPhone 6 or iPhone 6 Plus, the current product cycle still has plenty of room for growth. Morgan Stanley's own survey data suggest that more than half of iPhone users will be due for an upgrade during the so-called "iPhone 6s" product cycle.

She also expects that demand for the Apple Watch will accelerate in the coming months. And despite comments saying that margins for the wrist-worn device will be lower than the company's current average, Huberty believes margins will improve to the mid-40-percent range once the product ramps up to larger volumes.


Piper Jaffray

To analyst Gene Munster, Apple's guidance for the current June quarter implies that market share gains for the iPhone 6 and iPhone 6 Plus will continue into the summer.

"We believe the iPhone unit strength is another sign of the iPhone 6 cycle's fundamental difference from prior upgrades, given the size increase of the screen," Munster wrote. "If you look at the high end of the market, the iPhone share gains are more pronounced."

Piper Jaffray also tweaked its AAPL price target, raising it by $2 to $162, following the March quarter results.

Brean Capital

Though coverage of Apple from Brean Capital only just began this month, analyst Ananda Baruah has already increased his price target from $160 to $170.

He said Apple's March quarter results are "proof positive" that the company is on track to outpace Wall Street expectations in the coming years.

His forecasts through 2017 call for Apple to exceed market expectations on both iPhone sales and gross margins.


Cowen and Company

Unlike his peers, analyst Timothy Arcuri did not up his price target for AAPL following earnings, but he was still encouraged by the company's report. His forecast calls for shares to reach $135.

Arcuri said the iPhone 6 product cycle still has "ample runway," and he remains bullish. His enthusiasm is not as strong, however, for the Apple Watch, which he believes will require the launch of a revised second-generation device to truly make a splash.

J.P. Morgan

Rod Hall also maintained his price target of $145, but noted to investors that he expects Apple to continue to outpace expectations for the rest of 2015. He sees that growth driven by the iPhone, the Apple Watch, and other new products.

"Apple Watch pre-order numbers, but based on its gross margin commentary we infer that the company is planning to invest heavily in FQ3 to ramp up production with a goal of supply meeting demand by June," Hall wrote.

Wells Fargo

Finally, longtime Apple bear Maynard Um continues to be unimpressed by the company. Though he admitted the March quarter was "strong," it still wasn't enough for him to revise his neutral "market perform" rating.

Um was disappointed by declining iPad sales, he believes revenue from Apple services should be higher, and he also said he's surprised that gross margins from the newly launched Apple Watch are below the corporate average. He also said the increase of $50 billion in share repurchases is below some investors' expectations.

Still, Um did adjust his valuation range for the company to between $125 and $135, up from a previous range of $120-$130.
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Comments

  • Reply 1 of 51
    icoco3icoco3 Posts: 1,400member

    Business as usual and they are just now picking up on it?  Won't stop the haters though.

  • Reply 2 of 51
    SpamSandwichSpamSandwich Posts: 28,371member
    Maynard Um...that toolbag still has a job?
  • Reply 3 of 51
    icoco3icoco3 Posts: 1,400member
    Quote:

    Originally Posted by SpamSandwich View Post



    Maynard Um...that toolbag still has a job?

     

    He upped his valuation after Apple passed by his previous valuation.  I am impressed. /s

  • Reply 4 of 51
    rogifanrogifan Posts: 10,669member
    Even a positive tweet from Uncle Carl is having a hard time moving the stock into positive territory today.
  • Reply 5 of 51
    normmnormm Posts: 501member

    AAPL has $200 billion in cash and has given back more than $100 billion in stock buybacks and dividends.  So basically Wall Street values the company as worth about twice the cash they would have on hand if they hadn't bothered to give any back.  It seems as if, had they just kept all the money, eventually Wall Street would value them as worth less than their cash on hand.

  • Reply 6 of 51
    hydrogenhydrogen Posts: 215member

    ... He does not understand the magic by which Apple can be so successful. He tries to compute the average figures gathered from his colleagues, and submit this as his own forecast, to play safe. Right after the Apple results publications, he prefers to remain silent, but will soon pop up with doomsday predictions for Apple (there is no better way to attract the spotlight, you know ...).

  • Reply 7 of 51
    palominepalomine Posts: 353member
    WTF is the game plan for trading AAPL this week according to the big players?

    :no:
  • Reply 8 of 51
    brucemcbrucemc Posts: 1,316member
    Quote:

    ...

    Arcuri said the iPhone 6 product cycle still has "ample runway," and he remains bullish. His enthusiasm is not as strong, however, for the Apple Watch, which he believes will require the launch of a revised second-generation device to truly make a splash.

     

    So it will not be until the second, or maybe even 3rd, generation of Apple Watch before it starts to grow in meaningful volumes?  You mean, like every product that Apple has ever produced?  I wonder if they themselves cringe a bit at the bilge they write in these notes.

  • Reply 9 of 51

    Still, Um did adjust his valuation range for the company to between $125 and $135, up from a previous range of $120-$130.

     

    That's what we Canadian's call: skating to where the puck was. Not good, Maynard.

  • Reply 10 of 51
    gprovidagprovida Posts: 239member
    I would have sworn there was an article justifying Apple's early day stock price drop due to Stockmarket concerns that Apple will not be able to keep up this growth in time. Now that Apple Stock is up in the afternoon, this perspective has disappeared.

    Yet another example of how speculation, hindsight, etc., create narratives on stock prices that are simple rationalizations for random noise in the system, whether individual or computer based herding behavior.

    Go for the fundamentals rather than explaining every blip and bump in a severally random price process.
  • Reply 11 of 51
    Quote:

    Originally Posted by gprovida View Post


    Yet another example of how speculation, hindsight, etc., create narratives on stock prices that are simple rationalizations for random noise in the system, whether individual or computer based herding behavior.



    Go for the fundamentals rather than explaining every blip and bump in a severally random price process.

     

    Indeed. It's also not surprising to see some profit taking (and hence drops in price) when the stock hit's a peak.

  • Reply 12 of 51
    Quote:

    Originally Posted by brucemc View Post

     

    So it will not be until the second, or maybe even 3rd, generation of Apple Watch before it starts to grow in meaningful volumes?  You mean, like every product that Apple has ever produced?  I wonder if they themselves cringe a bit at the bilge they write in these notes.




    One hopes. I also think people (and the street) are going to be disappointed if they expect iPhone-like revisions for the watch. My hunch is it'll be more like 3 years before we see a revision, maybe a little sooner if the competition really heats up.

  • Reply 13 of 51
    Quote:

    Originally Posted by sog35 View Post

     

     

    how do you know the stock is at a peak?




    I said "a peak" ... just one of many to come ;-)

  • Reply 14 of 51
    freerangefreerange Posts: 1,564member
    Wells Fargo, yes, that's where I would go for investment advice, as they pick my pocket like every other bank. Shameful!
  • Reply 15 of 51
    slurpyslurpy Posts: 4,938member
    Quote:

    Originally Posted by MattBookAir View Post

     



    One hopes. I also think people (and the street) are going to be disappointed if they expect iPhone-like revisions for the watch. My hunch is it'll be more like 3 years before we see a revision, maybe a little sooner if the competition really heats up.


     

    No way in hell it will be 3 yrs. Nice in theory, but that's a fucking eternity, and you NEED new launches and product revisions to keep it in the news cycle and awareness with public. I'd say 2 yrs at the MOST, but I wouldn't be surprised if we had some kind of update in a yr. 

  • Reply 16 of 51
    fallenjtfallenjt Posts: 3,665member

    Bloomberg concern on iPhone growth...lol. iPhone has never been slowing down since 2007 in US. Wall Street clowns should see that. iPhone upgrade cycle on average is 2 years, so people continue to upgrade iPhone over time. There's no such thing "iPhone saturated the market". Beside, iPhone only takes 12-13% market shares, so think on growth potential there. I would not bet on android because it's actually saturated. 

  • Reply 17 of 51
    Quote:

    Originally Posted by Slurpy View Post

     

     

    No way in hell it will be 3 yrs. Nice in theory, but that's a fucking eternity, and you NEED new launches and product revisions to keep it in the news cycle and awareness with public. I'd say 2 yrs at the MOST, but I wouldn't be surprised if we had some kind of update in a yr. 




    Well, I'd say 2 at the earliest. This is as much jewellery as it is tech, and I think buyers will be put off if their investment goes out of fashion too quickly. People paying 1K for a watch expect to wear it for a while before feeling the have to replace it. I could imagine a "tech update" coming sooner, perhaps, where they up the CPU and battery life, but keep the look unchanged ... but I still see that being 2 years out.

     

    Also Apple has often taken an "eternity" to update some products, as we're all aware.

  • Reply 18 of 51
    fallenjtfallenjt Posts: 3,665member
    Quote:

    Originally Posted by Slurpy View Post

     

     

    No way in hell it will be 3 yrs. Nice in theory, but that's a fucking eternity, and you NEED new launches and product revisions to keep it in the news cycle and awareness with public. I'd say 2 yrs at the MOST, but I wouldn't be surprised if we had some kind of update in a yr. 


    I bet by next Summer, we will see the 2nd generation of Apple Watch. That's when I'll buy one.

  • Reply 19 of 51
    SpamSandwichSpamSandwich Posts: 28,371member
    fallenjt wrote: »
    I bet by next Summer, we will see the 2nd generation of Apple Watch. That's when I'll buy one.

    I'm also probably going to go for the 2nd gen. Any issues should be ironed out by then.
  • Reply 20 of 51
    fallenjtfallenjt Posts: 3,665member
    Quote:
    Originally Posted by MattBookAir View Post

     



    Well, I'd say 2 at the earliest. This is as much jewellery as it is tech, and I think buyers will be put off if their investment goes out of fashion too quickly. People paying 1K for a watch expect to wear it for a while before feeling the have to replace it. I could imagine a "tech update" coming sooner, perhaps, where they up the CPU and battery life, but keep the look unchanged ... but I still see that being 2 years out.

     

    Also Apple has often taken an "eternity" to update some products, as we're all aware.


    "Goes out of fashion"? The mid-term refresh doesn't change the physical design but improve the cons in the previous one. iPhone reminds you of anything? BTW, people pay $1k for iPhone too and do they concern if it's refreshed next year? If you think people buy Apple Watch for fashion, then Apple may just sell a lot less units than they did.

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