Estimates raised on Wall Street as Apple impresses investors again with another record quarter
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.
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.
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.
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.
"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.
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.
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.
"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.
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.
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.
Comments
Business as usual and they are just now picking up on it? Won't stop the haters though.
Maynard Um...that toolbag still has a job?
He upped his valuation after Apple passed by his previous valuation. I am impressed. /s
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.
... 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 ...).
:no:
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.
That's what we Canadian's call: skating to where the puck was. Not good, Maynard.
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.
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.
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.
how do you know the stock is at a peak?
I said "a peak" ... just one of many to come ;-)
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.
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.
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.
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.
I'm also probably going to go for the 2nd gen. Any issues should be ironed out by then.
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.