Wall Street remains optimistic about 'iPhone 7' & Apple's 2017 after Q2 declines

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in AAPL Investors
Analysts on Wall Street were pushing optimism after Apple's disappointing fiscal 2016 second quarter earnings, saying they expect that the company will continue to innovate and will return to growth over the next year.




iPhone sales fell to 51.2 million in the March quarter, down from 61 million a year ago. Sales and revenue also fell accordingly, marking the first time since 2003 that Apple didn't grow, and also the first time the iPhone saw a year-over-year sales decline.

Those results weren't exactly surprising, however --?Apple had already warned investors that iPhone sales would decline, and the results reported were in line with Apple's own guidance. Though they were disappointed, analysts weren't shocked by the results, and continued to express optimism for Apple in the near future. Highlights of their commentary, as provided to AppleInsider, follow.

Cowen and Company



Analyst Timothy Arcuri believes investors will look back on Apple's current situation as the "last estimate cut" before things take off with the anticipated launch of the "iPhone 7." He believes that device will serve as a bridge to a "new cycle of innovation" in 2017.

Acuri maintained his "outperform" rating for shares of AAPL, though he adjusted his price target downward from $135 to $125. He also noted that he sees the risk-reward ratio at greater than two-to-one upside with shares trading below $100.

Looking forward to 2017, Arcuri is excited by rumors of an iPhone with an all-new form factor, including a glass back and OLED display. He believes a shakeup for the iPhone lineup could create an iPhone 6-like upgrade cycle, particularly if Apple can make major improvements in battery life.




Wells Fargo



"Now would be the time to get more bullish on AAPL shares," analyst Maynard Um wrote. His analysis suggest investors should be excited about the "iPhone 7" product cycle, as "non-S" iPhone upgrades typically generate more interest with consumers.

Specifically, he's bullish on the "iPhone 7" as he expects two-year contracts for iPhone 6 buyers will be coming to an end, and consumers who are looking to upgrade.

"We reiterate our Outperform rating as we believe the iPhone 7 growth potential is now being underestimated," Um said.

Wells Fargo has held a "valuation range" of $120 to $130 for AAPL.

Piper Jaffray



Analyst Gene Munster believes shares of AAPL will rebound in 2016, and he too expects the iPhone to return to growth in the upcoming December quarter. Like Um, Munster spoke of an "inherent upgrade base" in the waiting as two-year contract subsidies expire.

Munster's forecast calls for 1 percent unit growth for the iPhone 7 cycle compared to the iPhone 6 cycle. That translates to 11 percent year-over-year growth from the iPhone 6s.

Piper Jaffray has maintained its "overweight" rating for Apple, and the company remains its top pick for investors in 2016. However, the firm did cut its price target from $172 to $153.




RBC Capital Markets



Amit Daryanani also maintained an "outperform" rating for Apple after its March quarter results sent the stock tumbling. Though he admitted Apple's June quarter guidance was "exceptionally disappointing," he believes valuation for the company provides support for the stock in the mid-90s in the near term, suggesting shares won't go far below that threshold.

With tough iPhone 6 comparisons almost out of the way, Daryanani believes apple should return to growth in the December quarter on the strength of an "iPhone 7" launch. He also expects to see a modest increase in gross margins that should enable the company to drive earnings per share growth.

Though he continues to believe investors should buy in to AAPL, Daryanani trimmed his price target on shares of the company from $130 to $120.

Macquarie Securities



Though iPhone guidance remains weak for the current June quarter, analyst Ben Schachter found a bright spot in Apple's services business, which saw revenue increase 20 percent last quarter.

Schachter believes the services business accounted for 23 percent of Apple's gross profits in the March quarter, and will comprise 25 percent of the company's fiscal year 2017 gross profits.

Like others, Schachter believes Apple's comparisons will ease in the December quarter, putting the company in a position to restimulate growth. He also believes Apple could spur innovation through a major acquisition.

"Tim Cook's commentary suggested an Apple that is more open to large acquisitions to help it innovate in current, and potentially, new categories," he wrote. "We will not be surprised to see a more acquisitive AAPL in the future."

Macquarie has maintained an "outperform" rating, but trimmed its price target on AAPL from $117 to $112.




Brean Capital



AAPL stock may face "additional wrinkles" in the near future, analyst Ananda Baruah believes. But he also believes that by August, the company could once again be in a position to beat revenue and meet gross margins expectations.

Still, Baruah slashed his Apple price target from $155 to $125. Brean Capital has, however, maintained a "buy" rating for shares of the company.
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Comments

  • Reply 1 of 24
    The blood thirst to making Apple the best possible pushing that ceiling is vanished, it's become a company to protect their products. The walled garden worked when everything was set to perfection.
  • Reply 2 of 24
    quadra 610quadra 610 Posts: 6,746member
    Of course they're optimistic. No other consumer tech company on the planet offers the same end-to-end, integrated experience that Apple does. And part of this perfected system of vertical integration is the iPhone.
  • Reply 3 of 24
    Optimism from Wall St?

    Oh wait, all their pals are off buying that new Ferrari after shorting Apple Stock and getting rich.

    Leeeches the lot of them.
    You get rid of them with a naked flame.... Hmmm now that's an idea.
  • Reply 4 of 24
    The current perfected system has become boring, they should innovate to manage iOS devices by cloud creating profiles under a device tree, they should open up Maps to work on any platform or browser.  Quit f**king around isolating their products if they can't make the best commercials and advertising to sell the products, the hype machine is depleting.
  • Reply 5 of 24
    toukaletoukale Posts: 37member
    I am all in on Apple except the one thing I was afraid of is happening.  Under Tim Cook, it's not about the product or us (consumers) anymore, it's all about wall street.  I feel the past few years Apple have been making their product experience worst in ways to squeeze more margins as a way to appease wall street.  You see it in all their entry level products.  No one should buy any of their entry model products, because if you do, you will come to regret 6 months after.  When you are selling a premium product and a premium price, you don't do that to your users.  If all the fist time iPhone buyers are going to go for the entry level (which make sense) their experience should be great.  You don't make it where it's painful for them because they did not select the middle tier, not at those crazy prices. Wall street do not care about the longevity of a company, it's all about what will you do for me next quarter.  Look around up and down their line up, that's all they are about these days, and frankly as a user of their products that saddens me.  For that reason alone, I fear Tim Cook will slowly head the company a path that will ruin the company.  You can't run your company trying to please wall street, it's a losing battle.
  • Reply 6 of 24
    I'm a troll because I see it how it is, Apple is isolating their products in protecting the brand.  You guys don't get it, I'm pissed because I loved what Apple did to the industry, the momentum for perfection was a high to watch when Apple under Steve Jobs would release products.  Now Microsoft is positioning for the decade plan while Apple sits today's plan
  • Reply 7 of 24
    mj webmj web Posts: 918member
    Tim Cook has no feel for Apple. IMO, he's never been part of the company's DNA. As an Apple shareholder and supporter since 2007 I'm beginning to feel Apple is "DOOMED", and I used that word specifically and advisedly for all you fanboys on AI. Your snarky, pat, emoji-speak didn't prevent AAPL crashing from $135 a year ago to $96 today. Under a competent CEO AAPL would, could, and should be north of $200. If Apple had come up with one compelling product besides the iP 6/S. And where the hell is Jony Ive? Did he really design that useless Chicklet of a watch whose best design element is the band? Give me an achey break!
    StephenRobert
  • Reply 8 of 24
    croprcropr Posts: 966member
    I would love to be optimistic about the iPhone7, but we'll have to wait to see what Apple will deliver.  If it is only a faster processor, extra memory and the removal of the audio jack, I don't see a reason to upgrade my iPhone 6, which is more than fast enough.   And I am sure I am not the only one. 
  • Reply 9 of 24
    mj web said:
    Tim Cook has no feel for Apple. IMO, he's never been part of the company's DNA. As an Apple shareholder and supporter since 2007 I'm beginning to feel Apple is "DOOMED", and I used that word specifically and advisedly for all you fanboys on AI. Your snarky, pat, emoji-speak didn't prevent AAPL crashing from $135 a year ago to $96 today. Under a competent CEO AAPL would, could, and should be north of $200. If Apple had come up with one compelling product besides the iP 6/S. And where the hell is Jony Ive? Did he really design that useless Chicklet of a watch whose best design element is the band? Give me an achey break!
    Apple isn't doomed, but they need to light a f*cking fire to push for perfection and open up the applications to be cross platform with any device or browser, they should have had devices/iOS management tree by cloud by now.  Pisses me off
  • Reply 10 of 24
    pmzpmz Posts: 3,433member
    I think there is a possibility of Apple announcing the iPhone 7 at WWDC, months ahead of its debut. Apple has a Q3 iPhone sales boost coming from iPhone SE numbers, and isn't likely to lose any additional numbers from announcing a new iPhone too early. In fact, it may help blur the lines as any Q3 loss could be chalked up to iPhone 7 hype.
  • Reply 11 of 24
    pmzpmz Posts: 3,433member
    mj web said:
    Tim Cook has no feel for Apple. IMO, he's never been part of the company's DNA. As an Apple shareholder and supporter since 2007 I'm beginning to feel Apple is "DOOMED", and I used that word specifically and advisedly for all you fanboys on AI. Your snarky, pat, emoji-speak didn't prevent AAPL crashing from $135 a year ago to $96 today. Under a competent CEO AAPL would, could, and should be north of $200. If Apple had come up with one compelling product besides the iP 6/S. And where the hell is Jony Ive? Did he really design that useless Chicklet of a watch whose best design element is the band? Give me an achey break!
    Right, so 50 billion dollars = Apple is doomed.
    edited April 2016
  • Reply 12 of 24
    Well they would say that after Wall Street hedge funds just cashed out 50 billion dollars! Popping the champagne right now!
  • Reply 13 of 24
    mj web said:
    Tim Cook has no feel for Apple. IMO, he's never been part of the company's DNA. As an Apple shareholder and supporter since 2007 I'm beginning to feel Apple is "DOOMED", and I used that word specifically and advisedly for all you fanboys on AI. Your snarky, pat, emoji-speak didn't prevent AAPL crashing from $135 a year ago to $96 today. Under a competent CEO AAPL would, could, and should be north of $200. If Apple had come up with one compelling product besides the iP 6/S. And where the hell is Jony Ive? Did he really design that useless Chicklet of a watch whose best design element is the band? Give me an achey break!
    Apple isn't doomed, but they need to light a f*cking fire to push for perfection and open up the applications to be cross platform with any device or browser, they should have had devices/iOS management tree by cloud by now.  Pisses me off
    If Apple wants to expand their services business I agree with this.  Their services need to be fully standards based, cross browser, cross platform, and where native clients are used, they should have clients for OSX, Windows, Linux, iOS, and Android.
  • Reply 14 of 24
    fallenjtfallenjt Posts: 3,982member
    The current perfected system has become boring, they should innovate to manage iOS devices by cloud creating profiles under a device tree, they should open up Maps to work on any platform or browser.  Quit f**king around isolating their products if they can't make the best commercials and advertising to sell the products, the hype machine is depleting.
    Sure, ask any of fcking Android device makers that can even come close to Apple. Apple is here to stay and will always be the leading technological company which set bar for others to copy. Yes, I said it "copy" not "follow".
    edited April 2016 mwhite
  • Reply 15 of 24
    fallenjtfallenjt Posts: 3,982member

    mj web said:
    Tim Cook has no feel for Apple. IMO, he's never been part of the company's DNA. As an Apple shareholder and supporter since 2007 I'm beginning to feel Apple is "DOOMED", and I used that word specifically and advisedly for all you fanboys on AI. Your snarky, pat, emoji-speak didn't prevent AAPL crashing from $135 a year ago to $96 today. Under a competent CEO AAPL would, could, and should be north of $200. If Apple had come up with one compelling product besides the iP 6/S. And where the hell is Jony Ive? Did he really design that useless Chicklet of a watch whose best design element is the band? Give me an achey break!
    Apple isn't doomed, but they need to light a f*cking fire to push for perfection and open up the applications to be cross platform with any device or browser, they should have had devices/iOS management tree by cloud by now.  Pisses me off
    Android can do that. Why should you be pissed? Oh, I forgot, android platform/app suck. BTW, iPhone users are loyal, so once Apple reach maximum user base, their services will create more revenues while iPhone revenue will stay the same every year. Android? not so much....because they have to continue to add gimmicks to keep customers...
    mwhite
  • Reply 16 of 24
    Apple has at least two things against it.  First Apple has stated several times that they are not focused on stock price.  This is evidenced by the fact the stock reached $100 split adjusted back in 2012. 

    Secondly, these analyst refuse to bring their target prices and estimates down to a more realistic level.  Why would any analyst have a 1yr 150.00 target on this stock when earnings will drop for a second quarter?  As s
  • Reply 17 of 24
    pmz said:
    I think there is a possibility of Apple announcing the iPhone 7 at WWDC, months ahead of its debut. Apple has a Q3 iPhone sales boost coming from iPhone SE numbers, and isn't likely to lose any additional numbers from announcing a new iPhone too early. In fact, it may help blur the lines as any Q3 loss could be chalked up to iPhone 7 hype.

    I suspect that there is a good probability that Apple will announce the next iPhone at WWDC -- with availability in early to mid August.

    I don't think it will be called iPhone  7.


  • Reply 18 of 24
    bbhbbh Posts: 79member
    I'm a troll because I see it how it is, Apple is isolating their products in protecting the brand.  You guys don't get it, I'm pissed because I loved what Apple did to the industry, the momentum for perfection was a high to watch when Apple under Steve Jobs would release products.  Now Microsoft is positioning for the decade plan while Apple sits today's plan
    You may not be a troll, but you are saddly wrong. They tried "expanding" the brand before and all that led to was cheaper stuff...NOT the AppleBrand. Stay separate. Emphasize quality. Jeez...once everybody you know has an iPhone, how can you expect sales to increase each quarter? I opt for a new one about every two years. That is probably normal.
  • Reply 19 of 24
    fastasleepfastasleep Posts: 3,343member
    So... do I buy more AAPL now or wait til it drops again after next Q's results?
  • Reply 20 of 24
    pmz said:
    I think there is a possibility of Apple announcing the iPhone 7 at WWDC, months ahead of its debut. Apple has a Q3 iPhone sales boost coming from iPhone SE numbers, and isn't likely to lose any additional numbers from announcing a new iPhone too early. In fact, it may help blur the lines as any Q3 loss could be chalked up to iPhone 7 hype.

    I suspect that there is a good probability that Apple will announce the next iPhone at WWDC -- with availability in early to mid August.

    I don't think it will be called iPhone  7.



    Interesting. Why do you think it'll debut at WWDC?
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