Wall Street breathes a sigh of relief after Apple's better-than-feared June quarter

Posted:
in AAPL Investors
Apple's June quarter earnings came in slightly higher than expected this week, propelling shares higher by more than 6 percent back over the $100 threshold. Analysts were generally pleased by Apple's results?-- here's a roundup of their responses, as collected by AppleInsider.




Apple reported $42.4 billion in revenue and quarterly net income of $7.8 billion, ahead of Wall Street consensus of $42.2 billion in revenue. iPhone sales --?the key factor in Apple's earnings -- came in at 40.4 million units, also slightly ahead of market forecasts averaging 40 million.
Most analysts believe investors should buy in on AAPL stock before the "iPhone 7" launch, as well as what is predicted to be a huge 2017 for the company.
Shares of Apple jumped once the results came out in after-hours trading on Tuesday, and those gains carried into Wednesday morning, when the share price hovered around $103.

RBC Capital Markets: It's all about the margins



Analyst Amit Daryanani said that investors were bracing for a miss in the June quarter, along with a guide-down for the upcoming September quarter. The market was generally pleased when they didn't get that.

"Amazing things happen when investors don't expect much," he wrote.

In particular, Daryanani believes investors are encouraged by a more stable gross-margin line despite strong traction for the entry-level iPhone SE.

Margins for the quarter were at 38 percent, which was at the high end of Apple's own guidance. Looking forward to the September quarter, Apple expects consistency, guiding to between 37.5 and 38 percent.




Piper Jaffray: With two shots, the odds are in Apple's favor



Though sales are down year over year, analyst Gene Munster believes Apple is headed in the right direction and should return to growth in the December quarter.

In fact, even if the anticipated "iPhone 7" disappoints this fall, Munster told investors that he believes shares of AAPL will still outperform. He sees demand simply being pushed into calendar year 2017, assuming a more meaningful upgrade and aging device install base.

"We continue to believe that Apple will return to growth in Dec-16 via consumer interest in the iPhone 7 combined with easier comps," Munster wrote. "If we are wrong, we think the disappointment of the iPhone 7 will pave the way for a strong iPhone 7S/8 cycle in CY17-18 given a large 2-3 year old device upgrade pool."

Cowen and Company: Shares should perform better near-term



While he doesn't think Apple stock is "out of the woods" quite yet, analyst Timothy Arcuri remains bullish on Apple's prospects in 2017.

Citing data from the supply chain, he says he doesn't believe Apple is currently gearing up to build 70-million-plus iPhones this fall. If that's the case and Apple sees another year-over-year decline after the debut of its 2016 model, he believes shares could struggle.

But he believes investors should have a full position in AAPL by mid-to-late fall because he described himself as "very bullish" on the company's next year. He's particularly excited about rumors of a completely redesigned all-glass iPhone, combined with what he described as a "massively aging base" of iPhone users prime for upgrades.

Investors who see any perceived "weakness" in the stock below $100 per share should buy in, he advised.




Wells Fargo Securities: Focus on the extra week this fall



As he said earlier this week, analyst Maynard Um continues to believe that Apple's December quarter will feature an extra week than then year prior. While it's purely an accounting consideration, he noted that extra week of iPhone sales will make the comparison easier to the same quarter in 2015.

Um estimates that the extra week could add 3 million iPhone units to consensus. He believes Apple will reach 77 million units in the December quarter, easily besting the 74.8 million quarterly record it achieved in the holiday 2015 frame.

Brean Capital: Apple's comments on iPhone ASP encouraging



Though the average selling price of the iPhone dropped to $595 last quarter due to the strength of the iPhone SE, Apple executives said they expect ASPs to increase in the current September quarter.

That's encouraging news to analyst Ananda Baruah, who told investors that he sees iPhone ASPs increasing between 5 and 10 percent next quarter, reaching about $650. That's expected to be aided by the fact that Apple is planning to cut back on channel inventory reductions, after a particularly aggressive June quarter.

More encouraging news came in the form of the iPad average selling price --?at $490, it well exceeded Wall Street expectations of $430. iPad ASPs have been driven higher by the success of Apple's iPad Pro lineup, in particular the 9.7-inch model starting at $599.




Rosenblatt Securities: Apple guidance signals solid 'iPhone 7' orders



While others are concerned that the "iPhone 7" could disappoint, analyst Jun Zhang believes Apple's orders for the next-generation handset will be "fine." The company is expected to announce and launch its 2016 model toward the end of the September quarter.

Zhang predicts that Apple will produce 54 million iPhone units in the current quarter, and will ship 45 million. While he expects an acceptable launch for the "iPhone 7," overall sales are forecast drop year over year due to lagging performance of the iPhone 6s.

Zhang has still maintained cautiousness, citing concerns that cheap Chinese handset makers could chip away at Apple's share locally.

Comments

  • Reply 1 of 11
    zoetmbzoetmb Posts: 2,329member
    The NY Times put a negative spin on it:   "Apple Sales Sink Again as Growth Rises in Services":   "...The quarter that ended in March was the first time in 13 years that revenue at Apple, which has spent much of the last five years as the world's most valuable company, was lower than in the same period a year earlier..."  "Still, Apple remains primarily a hardware company, and its products did not fare well...."


  • Reply 2 of 11
    MacProMacPro Posts: 17,577member
    Isn't Wall Street a collection of geniuses.  /s

    So all Tim has to do is really low ball every projection. 
  • Reply 3 of 11
    TurboPGTTurboPGT Posts: 355member
    So the entire tech industry, and pundits alike, are all entirely fixated on the fact that: the back of the iPhone 7 is going to vaguely resemble the iPhone 6, which makes it impossible for it to have that 'entirely-new-shiny-toy' appeal, and thus could impact upgrades?

    Am I the only person who spends my time looking at the FRONT of my iPhone?
    edited July 2016 latifbpSpamSandwichrob53brucemcanomeDeelronnetmagejustadcomics
  • Reply 4 of 11
    Isn't Wall Street a collection of geniuses.  /s

    So all Tim has to do is really low ball every projection. 
    that's what they were doing before  - jobs used to sandbag results to then look like hero - until they got burned with the 4s
  • Reply 5 of 11
    SpamSandwichSpamSandwich Posts: 29,891member
    TurboPGT said:
    So the entire tech industry, and pundits alike, are all entirely fixated on the fact that: the back of the iPhone 7 is going to vaguely resemble the iPhone 6, which makes it impossible for it to have that 'entirely-new-shiny-toy' appeal, and thus could impact upgrades?

    Am I the only person who spends my time looking at the FRONT of my iPhone?
    You are not an Apple analyst, so your opinion is moot. ;)
  • Reply 6 of 11
    drewys808drewys808 Posts: 528member

    "Amazing things happen when investors don't expect much," he wrote.

    THIS is the narrative, that if managed, would avoid so much of the stock manipulation in the past.
    ...who am I kidding?

    Ain't gonna happen as Apple is always held to a higher and "unfair" standard.

    Just gotta live with it I guess.  :(
  • Reply 7 of 11
    Wow, talk about follow the leader. Everyday these muppets have been talking down Apple and then the results come in and now they want to praise Apple just so they can get a piece of the Apple pie.

    Just wait, these idiots will be back down talking Apple until the next quarter. I predict Monday next week.
    Deelron
  • Reply 8 of 11
    SpamSandwichSpamSandwich Posts: 29,891member
    Just taking issue with the story headline for a sec... "Wall Street" doesn't "care" about Apple. They are just another company and another stock. People buy or sell based on momentum, based on quarterly reports, based on rumors, etc. They'll make money whether AAPL goes up or down.
    edited July 2016 Deelron
  • Reply 9 of 11
    anomeanome Posts: 1,118member
    TurboPGT said:
    So the entire tech industry, and pundits alike, are all entirely fixated on the fact that: the back of the iPhone 7 is going to vaguely resemble the iPhone 6, which makes it impossible for it to have that 'entirely-new-shiny-toy' appeal, and thus could impact upgrades?

    Am I the only person who spends my time looking at the FRONT of my iPhone?

    Wait. You're supposed to look at the *front*? So that's what I've been doing wrong...
    SpamSandwichDeelronanantksundaram
  • Reply 10 of 11
    I'm so used to Wall Street banging Apple up the day the release numbers, it's refreshing to see Wall Street remain calm.
  • Reply 11 of 11
    foggyhillfoggyhill Posts: 4,754member
    zoetmb said:
    The NY Times put a negative spin on it:   "Apple Sales Sink Again as Growth Rises in Services":   "...The quarter that ended in March was the first time in 13 years that revenue at Apple, which has spent much of the last five years as the world's most valuable company, was lower than in the same period a year earlier..."  "Still, Apple remains primarily a hardware company, and its products did not fare well...."


    The funny thing is that last year's result were so high above projection (any projection), that this is basically a meaningless comment on their part.

    Basically, Apple got a load of pent up demand for a bigger screen that made last years result a blip on an otherwise smooth growth curve.

    badmonkanantksundaram
Sign In or Register to comment.