Wall Street relieved by Apple's strong guidance for holiday quarter
Concerns that the iPhone 6s upgrade cycle could post first-ever year over year sales declines were alleviated this week, when Apple indicated it expects iPhone sales will grow yet again this holiday quarter. Analysts on Wall Street reacted to the news positively, advising investors to buy in.
Apple reported a record September quarter on Tuesday, earning $51.5 billion in revenue and $11.1 billion in net profit on sales of 48 million iPhones and 5.7 million Macs. But many analysts were more focused on the company's current December quarter, which Apple guided to revenue between $75.5 billion and $77.5 billion.
Wall Street reacted positively to the news, sending shares of AAPL up in after-hours trading Tuesday, and continuing into early morning trading on Wednesday.
Analysts also heaped praise on the iPhone maker in issued to investors after the earnings report, and AppleInsider offers a summary of their takes.
Some on Wall Street were forecasting that sales could decline between 5 and 8 percent year over year, Munster said. Investors have been concerned that the iPhone 6s cycle, with an external product appearance largely identical to the iPhone 6, would see consumer interest wane.
"The set up for the next 12 months is positive as comfort in the 6s cycle will allow investors to increase their optimism around the iPhone 7, along with a growing multi-year tailwind from iPhone upgrade cycles compressing and a potential Apple Watch acceleration in late 2016," he wrote.
Piper Jaffray has raised its price target on AAPL stock to $179.
He expects iPhone growth in the December quarter, but investors remain concerned about March. Milunovich is modeling a 21 percent sequential decline in revenue in the March quarter, but said that Apple could be helped by continuing switchers and the Chinese New Year.
Long-term, he views Apple as a more annuity-like company, with a belief that upgrade programs should make user upgrade cycles both shorter and more consistent.
UBS has maintained a "buy" rating on AAPL with a $150 price target.
Hall's estimates call for iPhone units to grow more than 7 percent in calendar year 2016 --?a number higher than most of his contemporaries on Wall Street.
The analyst was also encouraged by continued strong growth in China, and Cook's suggestion that the Apple iPhone Upgrade Program could expand beyond its own stores and into other countries.
UBS has maintained an "overweight" rating for AAPL with a price target of $145.
He was particularly impressed that Apple is forecasting year-over-year growth in the December quarter, despite what he called "Herculean" comparisons from the same period a year ago.
While a so-called "iPhone 6 hangover" still lingers, Ives believes there is continued room for growth with the iPhone. To him, the September quarter was a "pivotal inflection point" for the company.
FBR has maintained an "outperform" rating with a $175 price target for Apple.
Apple now defers $5 to $10 less per iOS device, which should help margins, and Um believes Apple will use that extra leverage to drive sales of its entry level iPhone 5s, pushing unit sales higher over the next two quarters.
Um also believes Apple's gross margin guidance of between 39 and 40 percent for the December quarter could actually prove conservative.
Wells Fargo has kept its "outperform" rating for Apple with a valuation range of $125 to $135.
He characterized iPhone units as "okay but not great," and said guidance for the next quarter was "down the middle of the fairway."
Cowen downgraded AAPL stock to "market perform" last quarter, and Arcuri has maintained that following this week's earnings report. To him, Apple's "beat and raise" strategy has given way to a "holding pattern" with simply "okay" estimates.
Cowen and Company has held its price target of $135.
Apple reported a record September quarter on Tuesday, earning $51.5 billion in revenue and $11.1 billion in net profit on sales of 48 million iPhones and 5.7 million Macs. But many analysts were more focused on the company's current December quarter, which Apple guided to revenue between $75.5 billion and $77.5 billion.
Wall Street reacted positively to the news, sending shares of AAPL up in after-hours trading Tuesday, and continuing into early morning trading on Wednesday.
Piper Jaffray, UBS, J.P. Morgan, FBR & Co. & Wells Fargo Securities all advise investors to buy in on AAPL.
Analysts also heaped praise on the iPhone maker in issued to investors after the earnings report, and AppleInsider offers a summary of their takes.
Piper Jaffray
To analyst Gene Munster, Apple's guidance was a "relief," after some investors were bracing for a potential decline in iPhone sales. Specifically, Apple Chief Executive Tim Cook said he fully expects that iPhone sales will grow year over year in the current December quarter.Some on Wall Street were forecasting that sales could decline between 5 and 8 percent year over year, Munster said. Investors have been concerned that the iPhone 6s cycle, with an external product appearance largely identical to the iPhone 6, would see consumer interest wane.
"The set up for the next 12 months is positive as comfort in the 6s cycle will allow investors to increase their optimism around the iPhone 7, along with a growing multi-year tailwind from iPhone upgrade cycles compressing and a potential Apple Watch acceleration in late 2016," he wrote.
Piper Jaffray has raised its price target on AAPL stock to $179.
UBS
The key reasons to own Apple stock are record switchers from Android handsets to the iPhone, as well as gradual upgrades continuing through the iPhone 6s cycle, analyst Steven Milunovich said.He expects iPhone growth in the December quarter, but investors remain concerned about March. Milunovich is modeling a 21 percent sequential decline in revenue in the March quarter, but said that Apple could be helped by continuing switchers and the Chinese New Year.
Long-term, he views Apple as a more annuity-like company, with a belief that upgrade programs should make user upgrade cycles both shorter and more consistent.
UBS has maintained a "buy" rating on AAPL with a $150 price target.
J.P. Morgan
Analyst Rod Hall's proprietary iPhone upgrade model has been predicting 1.4 percent unit growth in the December quarter -- a number that he noted is consistent with Apple's guidance. On Wednesday, he bumped that forecast up to 2 percent.Hall's estimates call for iPhone units to grow more than 7 percent in calendar year 2016 --?a number higher than most of his contemporaries on Wall Street.
The analyst was also encouraged by continued strong growth in China, and Cook's suggestion that the Apple iPhone Upgrade Program could expand beyond its own stores and into other countries.
UBS has maintained an "overweight" rating for AAPL with a price target of $145.
FBR & Co.
Apple's September quarter earnings were "a major step in turning the positive tide around the Apple story," analyst Daniel Ives said.He was particularly impressed that Apple is forecasting year-over-year growth in the December quarter, despite what he called "Herculean" comparisons from the same period a year ago.
While a so-called "iPhone 6 hangover" still lingers, Ives believes there is continued room for growth with the iPhone. To him, the September quarter was a "pivotal inflection point" for the company.
FBR has maintained an "outperform" rating with a $175 price target for Apple.
Wells Fargo Securities
iPhone units could be better than Wall Street expects in both the December and March quarters, analyst Maynard Um believes.Apple now defers $5 to $10 less per iOS device, which should help margins, and Um believes Apple will use that extra leverage to drive sales of its entry level iPhone 5s, pushing unit sales higher over the next two quarters.
Um also believes Apple's gross margin guidance of between 39 and 40 percent for the December quarter could actually prove conservative.
Wells Fargo has kept its "outperform" rating for Apple with a valuation range of $125 to $135.
Cowen and Company
Unlike most of his peers, analyst Timothy Arcuri was not particularly impressed with Apple's September quarter and December guidance.He characterized iPhone units as "okay but not great," and said guidance for the next quarter was "down the middle of the fairway."
Cowen downgraded AAPL stock to "market perform" last quarter, and Arcuri has maintained that following this week's earnings report. To him, Apple's "beat and raise" strategy has given way to a "holding pattern" with simply "okay" estimates.
Cowen and Company has held its price target of $135.
Comments
Apple's stock never pops. The reason is because there is too much option open interest. It takes a while for the big boys to close their short position and they don't allow the price to go up quickly.
I expect us to test $130 by mid November and $140 by EOY.
I expect to see $150 by late Jan/early Feb when Apple reports 10%+ revenue growth for the holiday quarter.
Go sog go!
F*CK Wallstreet.
It just does not matter any more, When it comes to Apple and knowing the short term is looking good the Analysis who typically are so short sited they spend more time looking at what is between their legs than the woman in front of them, are now only concern what will happen next year. They did the samething last year ever time apple beat the near term numbers they said well next year is going to be bad for them just wait the competition is coming for them and will leave apple in their dust. Now we know that did not happen and apple left everyone in their dust the analysis are saying because the competition is hurting Apple will hurt right along with them. It is all about next year not this quarter. Of any company which could make the market money Apple being it, the market is loosing just to prove apple is wrong. It a very sick way of doing business.
137 - Dec 31
150 - Feb 1
143 - May 1
I expect us to test $130 by mid November and $140 by EOY.
I expect to see $150 by late Jan/early Feb when Apple reports 10%+ revenue growth for the holiday quarter.
Good luck with that. From 3000 miles away, I get the impression that there are a lot of vested interests in Wall St that love to knock Apple shares for no good reason than 'they are Apple...'.
As has been said, Google/Alphabet Soup just meet forcasts and their shares rocket. Apple beats forecasts and their shares drop.
That isn't a market. That is a [redacted].
My AAPL Projections...
137 - Dec 31
150 - Feb 1
143 - May 1
very entertaining, and based on what exactly? It would be nice to see some reasoned analysis!
We should be seeing double digit stock price increase today. We should be breaking the 52-week high value. The stock continues t be artificially held down.
why? and why?
Just because the stock no longer has the meteoric rises that some folks got accustomed to since 2006 doesn't mean Wall Street is out to get'cha. Just my .02
F*CK Wallstreet.
What is WallStreet exactly? I'd like to know who and which set of investors who own Apple share and trade them you are referring to exactly? This nebulous term "Wall Street is meaningless" It simply an empty phrase which tells us nothing except you anger about something. You must be shouting F*CK at me because I'm one of those investors who manipulate the stock price as you probably think?
I bought in at $129 so eh...go baby go!
Thats when I sold some of mine in preparation for a retracement and bought them back at 103. Suggest you learn about swing trading and how to time your trades, It will make you more money than "hold and hope". My next conservative sell trigger is at 125 already programmed in and I have been changing my bracketed "stop loss" progressively higher as each day passes currently at the 100MA = 115.98 based on strategy that if it breaks below 100MA it will trade down from there. These are the fundamentals of how to profit from a stock by trading the swings based on the T-line and moving averages to act as buy and sell points
I really don't get all this doom and gloom from "investors" in Apple stock. Heck some of you probably became millionaires or close to it by investing in Apple stock 10 years (or more) ago), yet some of you seem to think they don't get respect from financial folks? Thinking the next 10 years will make folks as wealthy as the previous 10 is downright silly IMHO. It can't go on forever. That ship sailed and the likelihood of another gangbuster product with huge margins like the iPhone is pretty low. If you're in Apple just because you think it will make you rich beyond your wildest dreams you're in it for the wrong reasons. There's a whole lot of stocks with a better chance of doing that. But they aren't as safe a bet as Apple.
Just because the stock no longer has the meteoric rises that some folks got accustomed to since 2006 doesn't mean Wall Street is out to get'cha. Just my .02
wow I actually agree with you on this one. summarizing: Apple is now an income stock not a growth stock
To quote from another A.I. article:
According to Cook, 30 percent of customers who purchased an iPhone were upgrading from an Android-based smartphone, the largest number of switchers it had seen in the three years since it started measuring switching rates. "It's a huge number and we're very proud of it," said Cook.
The consistently negative read on Apple in the media is a great opportunity to profit by buying shares. The meme of "Apple has no room to grow" will continue to be disproven, until opinion can no longer withstand fact. It will happen.
500 million Chinese middle-class buyers may prove you wrong. At least I'm banking on it.
Some on Wall Street were forecasting that sales could decline between 5 and 8 percent year over year, Munster said.
Based upon what? Tea leaves? Chicken bones? Wooly worms? Keith Richard’s wrinkles?