Wall Street dismisses Apple's March quarter as minor speed bump, price targets raised at U...

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in AAPL Investors
Apple's second fiscal quarter of 2017 was largely a mixed bag, in the eyes of investors, who saw some positives but were also disappointed by some results. Analysts reacting to the quarterly results were largely indifferent on the short term, remaining focused on growth of the company's Services business and an anticipated "iPhone 8" super-cycle.




Following Apple's March 2017 quarterly results, Wall Street analysts offered their reactions, and AppleInsider offers a summary of their takes.
Analysts are bullish on Apple's anticipated "iPhone 8" launch and booming Services business.

UBS

Analyst Steven Milunovich said that Apple's continuously growing ecosystem bodes well for the company's future, regardless of any "iPhone 8" hype. He boosted his price target on shares of AAPL from $151 to $165.

To Milunovich, Apple's March quarter was largely in line with expectations. iPhones were slightly below estimates at 50.8 million units shipped, though sell-through was up 1 percent year over year as channel inventory declined.

Apple Watch units nearly doubled year over year, gross margins held up well, and the 10.7 percent quarterly dividend increase were all better than expected. However, Apple's share repurchase increase of $35 billion was below what UBS had forecast.

Looking forward to the June quarter, Apple's guidance of between $43.5 billion and $45.5 billion in revenue and gross margins between 37.5 and 38.5 percent were at the lower end of Wall Street expectations. But Milunovich said the numbers are reasonable, given that Apple Chief Executive Tim Cook acknowledged rumors of an "iPhone 8" redesign are affecting iPhone 7 series sales.

Cowen and Company

Analyst Timothy Arcuri also increased his AAPL target slightly, from $155 to $160, following the company's results. He declared Apple's March quarter simply "fine," and told investors that the company's "path of least resistance remains up."

Based on his math, Apple's guidance implies 41.5 million iPhone units will be shipped in June, assuming a flat year-over-year average selling price. If true, that would mean iPhone shipments would return to growth, as Apple shipped 40.4 million handsets in the June quarter a year ago.




Looking forward to the "iPhone 8," Arcuri continues to hear from supply chain sources that Apple is having trouble integrating a fingerprint sensor into the next-generation iPhone's OLED display. As a result, he continues to believe Apple could delay production by 4 to 6 weeks to allow itself more time to address those issues.

He said that while such a delay would likely remove all "iPhone 8" units from Apple's September quarter, it would just make the company's December quarter even bigger.

"Net/net, there was nothing to sway investors either way on this call, and a demand 'pause' should only be viewed more positively with respect to the unit potential this fall," Arcuri wrote.

RBC Capital Markets

Investors can "hit snooze for 90 days," analyst Amit Daryanani wrote.

He said revenues were largely in line with expectations, earnings per share exceeded forecasts, driven by strong Services performance and gross margins of 38.9 percent.

"All this puts the focus (rightfully) on the next iPhone launch that should happen in mid-to-late September," he said.

RBC has maintained its "outperform" rating for AAPL with a price target of $157. Like others, Daryanani sees Apple heading toward a "supercycle" with this year's "iPhone 8."


Loup Ventures

Analyst Gene Munster expects shares of AAPL to move higher in anticipation of announcements at the company's Worldwide Developers Conference in June.

He also believes that the current June quarter has now been "de-risked," thanks to Apple's own conservative guidance issued to Wall Street.

Looking forward to the "iPhone 8," he believes it has the potential of driving unit growth by 5 to 10 percent year over year.


J.P. Morgan

In a prediction out of line with rumors and expectations, analyst Rod Hall said he expects Apple will announce or preview its next-generation iPhone at WWDC. That would be out of step with the company's recent strategy, where WWDC remains focused on new versions of iOS and iPhone hardware updates wait until the fall.

Regardless, Hall said he expects a "weaker than normal summer for Apple" as consumers await the highly anticipated "iPhone 8." Like others, he's thinking longterm, and encouraged investors to buy in to AAPL before hype for the next iPhone begins in earnest.

J.P. Morgan has maintained an "overweight" rating for AAPL with a price target of $165.

Guggenheim

Analyst Rob Cihra "saw nothing to mute" his bullish outlook on Apple. He noted that the company's stock is already up 27 percent year-to-date, compared to just 6 percent growth in the S&P 500.

Cihra believes the "iPhone 8" will kick off a multi-year upgrade cycle, as consumers begin migrating to edge-to-edge OLED screens and embracing new biometric and augmented reality technologies.

Guggenheim has maintained its "buy" rating on Apple with a price target of $180.


Macquarie Research

Tremendous continued growth in Apple's Services business is a standout for analyst Ben Schachter, who noted that the overall number of paying accounts had the biggest quarterly growth ever.

Apple also saw the total number of subscriptions up 15 million sequentially to 165 million total. And the number of developers making apps also grew 26 percent year over year.

App Store revenue was also up 40 percent year over year, and Apple believes its services business will double in size by 2020.

Macquarie has reaffirmed its "outperform" rating on AAPL stock with a price target of $160.

Rosenblatt Securities

Finally, analyst Jun Zhang remains largely unimpressed by Apple, and stands out on Wall Street with a "neutral" rating for the company. His price target of $120 is well below all of the other investment firms tracked by Apple, and also considerably lower than its current trading price north of $145.

Zhang justified his negative outlook for the company by citing lower-than-expected iPhone sales in the quarter, an average selling price that came in under his expectations, continued slowing demand in China, and a "likely" delay for the OLED "iPhone 8."

Zhang believes Apple will announce the "iPhone 8" in September but launch it later, in October, due to apparent production issues.

Comments

  • Reply 1 of 13
    andrewj5790andrewj5790 Posts: 277member
    That's surprising. 
  • Reply 2 of 13
    lkrupplkrupp Posts: 7,464member
    sog35 said:
    No surprise

    Everyone knows all that matters is Sept-Dec

    1. iPhoneX release
    2. Tax cuts

    The next 2 earnings reports will be boring as hell
    Manna for AI trolls though.
  • Reply 3 of 13
    irnchrizirnchriz Posts: 1,591member
    Keep driving the share price up so that when no iphone 8 or anniversary iPhone appears they can dump out at max price and buy back in at the deflated price. All the while making a tonne of cash whilst ending up with the same volume of shares. 
    patchythepirate
  • Reply 4 of 13
    irelandireland Posts: 17,685member
    Bunch of crooks.
  • Reply 5 of 13
    haarhaar Posts: 563member
    Hit snooze for 90 days...  that is a good thing...  Apple stock is a blue chip stock.
    randominternetperson
  • Reply 6 of 13
    holyoneholyone Posts: 394member
    Not that I care about this sort of stuff but if the stock hits $170 or $180 how close will that be to the Trillion dollar evaluation ?
  • Reply 7 of 13
    holyoneholyone Posts: 394member
    And another thing don't companies list on stock exchanges to raise capital with a quater of a trillion in the bank why is Apple still there
  • Reply 8 of 13
    studiomusicstudiomusic Posts: 616member
    holyone said:
    And another thing don't companies list on stock exchanges to raise capital with a quater of a trillion in the bank why is Apple still there
    Because all of the people that gave that money for stock still owned the stock and have either kept it or sold it... Apple is trying to buy back it's shares, but there are so many of them, it takes a long time and a lot of money to do so.
    Don't count on them being off the stock exchange in the next 20 years at least.
    holyone
  • Reply 9 of 13
    carnegiecarnegie Posts: 736member
    holyone said:
    Not that I care about this sort of stuff but if the stock hits $170 or $180 how close will that be to the Trillion dollar evaluation ?
    It would depend on when it happened. But right now it would take a share price of around $190 for Apple to have a trillion dollar market cap.
    holyone
  • Reply 10 of 13
    carnegiecarnegie Posts: 736member
    holyone said:
    And another thing don't companies list on stock exchanges to raise capital with a quater of a trillion in the bank why is Apple still there
    Becoming a publicly-traded company isn't necessarily done (primarily) so that the company can raise capital. Often the company has already raised a lot of capital before going public. It may need to raise more or it may not. Even if it doesn't, going public opens up another way for its current owners (e.g. its early investors) to monetize their ownership. It allows them to cash out, so to speak, in full or in part. They can do private sales of stock even if the company isn't public. But the company going public can help them to get a better return on their investment.

    As for why Apple hasn't been taken private... in part it's because it would be incredibly difficult for someone (or a group of someones) to pull together enough money or financing to, in effect, buy Apple. Someone would need a trillion or so dollars to do it now, and even that might not be enough.
    edited May 2017 holyone
  • Reply 11 of 13
    applesauce007applesauce007 Posts: 1,622member
    I agree with Rod Hall (Chase) that Apple will probably have to preview the new iPhone at WWDC.
    This is because augmented reality APIs and architecture will likely be discussed and you can't really discuss them without showing what they can do.  I think Apple will also demo AR content creation applications.  Most likely derived from Metaio and PrimeSense.





  • Reply 12 of 13
    geekmeegeekmee Posts: 336member
    Wall Street is addicted to covering home runs rather singles and doubles of a successful business.
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