iPhone will outperform market expectations, pushing shares of Apple to $185, FBR says
Recent struggles for Apple stock are based on unfounded fears out of China, FBR Capital Markets said on Tuesday, telling investors it believes the "speed bump" will be over soon as strong iPhone sales continue.
Analyst Daniel H. Ives raised his estimates for Apple's just-concluded June quarter, in which he believes the company shipped 49 million iPhones, though he said the 50 million barrier is "within reach." A copy of Ives's latest estimates were provided to AppleInsider.
He believes Apple's revenue for the quarter was $49.2 billion, with earnings per share at $1.79. Those are increases from his previous estimates of $47.8 billion in revenue and $1.72 EPS.
FBR's new, higher estimates come as the firm has also reiterated its "outperform" rating for AAPL stock. With continued iPhone growth, Ives believes shares of the company will reach $185 within the next year.
With a week to go before Apple reveals the results of the June quarter, shares of the company are down about 5 percent since it reported its March earnings. But to Ives, those recent losses are a mere "speed bump" on the way to future continued growth.
"Ultimately we see more legs to the iPhone 6 product cycle than the Street is anticipating for the next few quarters, with China (despite recent macro headwinds) as a major driver of top-line growth, coupled by new products (Watch, Apple Pay, streaming) starting to pave the way for future avenues of consumer penetration," Ives wrote.
With new products on the horizon, most notably an anticipated iPhone refresh in September, he believes Apple is positioned strongly heading into its 2016 fiscal year.
Analyst Daniel H. Ives raised his estimates for Apple's just-concluded June quarter, in which he believes the company shipped 49 million iPhones, though he said the 50 million barrier is "within reach." A copy of Ives's latest estimates were provided to AppleInsider.
He believes Apple's revenue for the quarter was $49.2 billion, with earnings per share at $1.79. Those are increases from his previous estimates of $47.8 billion in revenue and $1.72 EPS.
FBR's new, higher estimates come as the firm has also reiterated its "outperform" rating for AAPL stock. With continued iPhone growth, Ives believes shares of the company will reach $185 within the next year.
With a week to go before Apple reveals the results of the June quarter, shares of the company are down about 5 percent since it reported its March earnings. But to Ives, those recent losses are a mere "speed bump" on the way to future continued growth.
"Ultimately we see more legs to the iPhone 6 product cycle than the Street is anticipating for the next few quarters, with China (despite recent macro headwinds) as a major driver of top-line growth, coupled by new products (Watch, Apple Pay, streaming) starting to pave the way for future avenues of consumer penetration," Ives wrote.
With new products on the horizon, most notably an anticipated iPhone refresh in September, he believes Apple is positioned strongly heading into its 2016 fiscal year.
Comments
With that said, I wish I could be rational and realize that it most likely will not go up from here and sell and walk away, but they lock me in with the dividends which are paying out for me greater than any other investment.
These high target prices are very annoying to Apple shareholders. Even a high target price makes Apple's share price go into the red. If it were Netflix, Google or Amazon, their share prices would have gone up 5% on that type of news. With Apple, it's like nothing good was announced. The institutional investors are staying away from Apple because they can't forget what happened back in 2012 when Apple went into a death spiral. How the heck does a company like Hewlett-Packard have nearly 80% institutional ownership and Apple only has 61% institutional ownership. H-P is practically struggling for survival. The big boy investors don't like or trust Tim Cook. If Jeff Bezos tells investors something, he's totally believed. If Tim Cook tells investors something, he's called a liar. It appears as though Apple shareholders are going to remain snake-bit for quite some time to come. For Apple shareholders, no news is good news and merely a precursor of doom.
Microsoft? Not that they've "fallen to the wayside," but they're definitely off their peak valuation by a good bit.
Not that i expect AAPL to go down at all, but $185 is pretty aggressive. It's not going to just keep going up into perpetuity. 150 - 160 is much more realistic.
Microsoft? Not that they've "fallen to the wayside," but they're definitely off their peak valuation by a good bit.
Not that i expect AAPL to go down at all, but $185 is pretty aggressive. It's not going to just keep going up into perpetuity. 150 - 160 is much more realistic.
Perhaps he should have added "and a P/E ratio which is lower than the market average..." (Apple PE is around 15). As many have noted before, Microsoft's P/E at the time was north of 50, and peaked at 81. So taking that into account, Apple is not like Microsoft in regard to peak valuation at all.
Agree that $185 is aggressive in near term (12 months), but not IMO out of consideration in a couple of years.
Well, if it goes to $185 I might be forced to retire; I would start selling around $150-160 though. That said, I think Apple will be a $1T company. I don't think that it is going to happen as quickly as it should, but it will happen. They might get to a point where they want or need to spin off entities, or even make a very large purchase like a bank.
The real problem Apple has it the fact no institutional buyers is going to over buy Apple, they are too afraid it will fall and they do not want to be caught holding the bag. There are far too many example of a company like Apple falling to the waste side that Wall street is invest on habit not logic or reasoning.
Apple revenue could go to zero, and they could still keep their R&D going unchanged *forever*. Apple has so much money that it is impossible for them to fail. Also, institutional buyers currently own 59.53% of the company.
Total gobbledygook if you ask me !
Nothing and no one is too big to fail.
Nothing and no one is too big to fail.
It is very unlikely that they will ever fail. It is possible, but it would require the company to throw away over 100 billion dollars on useless crap, and I just don't see that happening.
"Nothing and no one is too big to fail" - not a particularly useful soundbite unless backed up with deeper thought. Too big to fail is normally something people talk about with highly leveraged banks, not conservative companies with a couple hundred billion in cash.
Give a reasonable scenario where Apple fails - I think that you will find that every possible failure scenario would require Nortel-level incompetence. Every failure scenario would require Apple to completely go against its corporate culture.
Famous last words. The corporate graveyard is full of companies that couldn't fail yet did. Tastes and fortunes can change overnight.
The guys that made Pet Rocks.
Seriously tho I can't imagine Apple ever going bankrupt. How could they possibly spend the money they already have? But I can imagine a scenario, however remote it might be, where like Standard Oil or Bell Telephone there's a break-up of Apple into smaller competing companies someday.
General Motors would not be around if it were not bailed out by the US government.
General Motors would not be around if it were not bailed out by the US government.
They never had the cash that Apple has, Apple never had the crappy union sucking the life out the company that GM had.
GM made shit products for 40 years before they went bankrupt, it took a long time.
Even at its absolute peak GM was not even close to the market cap and profits of Apple. Not even close.
Even at its peak there were many other car brands that were equal rivals in the USA, Germany, Italy, ect. Ford, Crystler, BMW, Merc, ect were all strong at the same time as GM. No way did GM have 90% of industry profits like Apple has.
And it took DECADES for GM to fall. From their peak in the 60's it took almost FIFTY YEARS.
Try again.
The only examples I can think of are Bell Telephone and Standard Oil. And both were because of government intervention not because of corporate failure.
It's funny reading the posts of others trying to compare failed companies to Apple. They were in totally different situations, yet people here seem to think that Apple is in the same boat.
Sure, the "mighty have fallen". Apple though is in a very unique position that others were not. Apple has so much cash in the bank that if for some reason future revenue suddenly goes to zero, it can survive just on that cash hoard for basically the rest of our adult lives. GM could not do it.
The only way (right now) that I can see Apple disappearing - way WAY down the road - is if management suddenly becomes the most laziest, fat-cats ever, lighting up their cigarettes with rolled $100 bills, making such crappy products that no one ever wants to buy anything Apple again thus making the Apple brand synonymous with junk retailers like K-Mart (or Samsung) and in a few decades burns through all the money.
Really people. It would take an epic event found only in fictional movies to essentially erase Apple from existence. So I suppose, if some alien were to zap the earth with some giant EMP pulse, wiping out all modern technology, then yeah... Apple will fail. Then again, if that were to happen, I think we'd all have more pressing problems to deal with than worrying about the iPhone 75+.
Could you just imagine debt-ridden governments around the world salivating over Apple even more if they were to reach a trillion market cap and half a trillion in cash overseas? Talk about a feeding frenzy.
With that said, I wish I could be rational and realize that it most likely will not go up from here and sell and walk away, but they lock me in with the dividends which are paying out for me greater than any other investment.
In that case I don't understand the problem. It wouldn't be rational for you to walk away if you think it will remain stable, and you can justify it based on the dividends.