Although Apple Inc.’s shares are falling, despite a busted earnings report, many analysts are rooting for what the future holds for the company.
The smartphone giant posted $ 1.68 per share in earnings and $ 111.4 billion in revenue on Wednesday afternoon, both record numbers that came well ahead of the consensus forecast. The company’s iPhone business alone generated revenue in the Christmas quarter of $ 6 billion ahead of the consensus view.
After the strong report, investors are wondering if Apple AAPL,
it can sustain its momentum, something Chief Executive Tim Cook addressed in response to a question on the company’s earnings conference call. Cook argued that Apple still has considerable opportunities for organic growth stemming from newer products such as wearables, emerging markets, corporate sales and more.
Oppenheimer analyst Andrew Uerkwitz has written positively about Apple’s potential in more conventional product categories.
“We believe that the Mac (high single-digit share) and iPhone (low teen share) have more to gain, driven by Apple Silicon and the adoption of 5G, respectively,” he wrote, referring to the company’s custom M1 chip. Apple that is gradually rolling over to its Mac line. “We expect the significant performance / energy efficiency advantages that M1 has demonstrated (first generation only!) Over conventional competitors and a closer integration between Mac and iOS devices to reinvigorate the Mac growth and persuade more users to switch from Windows PC to Mac. ”
It has a superior performance rating and a $ 160 share price target.
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Jefferies analyst Kyle McNealy wrote of an “impressive quarter with more to come”, as Apple is still at the “beginning” of 5G device sales. He is optimistic about “a huge legacy of China-based base that needs updates”, as well as a weakened Huawei due to US export restrictions. The strong cycle of the iPhone may also continue to be a catalyst for more service and wearable revenue, he said.
McNealy values the stock as a purchase with a target price of $ 160.
Chris Caso, an analyst at Raymond James, also suggested that this latest report could be the beginning of a strong journey for the iPhone in a note entitled “We got the 5G cycle we were looking for, but we didn’t think it was over”. He wrote that Apple not only had higher sales in the December quarter than he expected, but also saw strong margins stemming from a greater combination of more expensive devices.
“Although Apple has completed this cycle, we have long considered it a two-year 5G cycle, with better global 5G coverage providing greater incentive for updates, along with what we hope will be a new form factor,” he wrote, while maintaining a higher performance rating and raises its target price from $ 150 to $ 160. “We expect services to benefit from the improvement in unit volume (which is increasing the installed base), along with new service offerings.”
Bernstein analyst Toni Sacconaghi wrote that “most impressive” was Apple’s disclosure that the iPhone 12 Pro models sold “especially well” in the last quarter, despite some economic pressures from the pandemic.
He sees favorable winds for Apple during much of the current fiscal year, as trends in remote work drive more technology purchases. “Ironically, although some retail locations are closed, Apple appears to have been a major beneficiary of consumer spending dollars reallocated during the pandemic,” he wrote. “Having said that, we fear that the strength of an iPhone update cycle and the pandemic may decrease in FY22, amid increasingly difficult annual comparisons for the company.”
He has a market performance rating for the stock and raised his target price from $ 120 to $ 132.
Apple shares have risen 27% over the past three months, according to the Dow Jones Industrial Average DJIA,
increased by 16%.