Analysts are largely bullish on Apple’s prospects after it reported better-than-expected results in its third-quarter earnings on Tuesday — sending the company’s stock to record highs.
Apple beat Wall Street’s expectations on both revenue and earnings per share, sending its stock jumping more than 5%, and also issued strong revenue guidance for the next quarter — hinting at the launch of an eagerly awaited redesigned iPhone in September.
Apple’s stock is currently sitting around the $150-mark.
In a research note, analysts for Macquarie wrote that its call “was one of its most bullish in recent memory,” and touted augmented reality (AR) as a potential growth area: “We expect that in addition to being a key marketing and functional driver of iPhone hardware, AR is going to be directly monetized via the App Store … we think AR will have some important near- term and many significant long-term implications for Apple and others.”
William Blair, meanwhile, said it “remain[s] bullish on the iPhone segment due to a combination of positive demand trends in emerging markets … a weak competitive landscape in the smartphone space… and the company taking an aggressive approach to enabling the device for next-generation applications.”
Not everyone was so positive though, with Barclay’s analysts warning that “pre-launch fervor [for the iPhone 8] could get frothy,” and that they remained “skeptical.”
Business Insider has rounded up a load of analysts’ reactions to Apple’s Q3 results, and you can read them all below. But first, here are all the key numbers, via Business Insider’s Kif Leswing:
- Q3 EPS (GAAP): $1.67, up 17% year-over-year, vs expectations of $1.57
- Q3 revenue: $45.4 billion, up 7% year-over-year, vs expectations of $44.95 billion
- Gross margin: 38.5%, up 1% year-over-year, vs expectations of 38.2%
- iPhone unit sales:41.0 million, up 1% year-over-year, vs expectations of 41.1 million
- iPad unit sales: 11.42 million, up 14% year-over-year
- Mac unit sales: 4.292 million, flat year-over-year
- Q4 revenue guidance: $49 billion – $52 billion vs expectations of $49.21 billion
Price target: $180
Comment: “We thought AAPL’s 3Q call was one of its most bullish in recent memory. Despite a coming big refresh, iPhone posted better than expected growth, and virtually all products in almost all geographies posted solid growth. Our focus remains on Services, and while AAPL didn’t provide App Store growth, it is clear that Services will remain the key number-two driver behind iPhone for the foreseeable future. We also think it is important to note AAPL and Tim Cook’s clear excitement about the potential for AR. We expect that in addition to being a key marketing and functional driver of iPhone hardware, AR is going to be directly monetized via the App Store. As Cook stated on the call, we “couldn’t be more excited about AR”, and despite our WAY too early call on VR, we think AR will have some important near- term and many significant long-term implications for Apple and others.”
Bank of America Merrill Lynch: BULLISH
Price target: $180
Comment: “Our PO of $180 is based on 16x our C2018 EPS estimate of $11.16. Our target multiple compares to the long-term historical range of 9-15x (median 12x). We believe a higher than historical multiple is justified given the anticipation of a strong upcoming iPhone 8 cycle where we expect smoother, more consistent growth in iPhone units. We also think a 16x multiple is justified given large cash balance and opportunity to diversify into new end markets and, and increasing mix of services. The multiple also reflects the potential for new repatriation tax laws that would allow for repatriation of a significant portion of the company’s foreign cash.”
Credit Suisse: BULLISH
Price target: $170
Comment: “We view this release as positive.”