Analysts are weighing in on the consumer electronics giant Apple Inc. (NASDAQ:AAPL) and online payment giant Paypal Holdings Inc (NASDAQ:PYPL), as both companies are heading into earnings. Subsequently, U.S. stocks edged lower Wednesday in lackluster trade, while weakness in the health-care sector helped to limit gains.
Based on our survey work and analysis, Canaccord analyst Michael Walkley believes Apple is maintaining strong share of the premium tier smartphone market. While Walkley believes the iPhone 6S products should enable Apple to continue to post strong sales and high-end smartphone market share gains, he anticipates the rate of share gains will slow given our survey work indicates ongoing slower growth trends for the global smartphone market.
Walkley wrote, “Our survey work indicates iPhone sales are maintaining strong share of the high-end smartphone market, especially in North America. Further, with Apple announcing its own installment program, we believe this will also help increase the rate in which iPhone consumers upgrade their devices. We believe the growing mix of consumers choosing installment plans combined with Apple’s own installments plans will positively impact replacement sales.”
“However, we believe overall global smartphone unit demand has slowed with the very low-end smartphone market driving unit growth in 2016. Therefore, we have decreased our new iPhone user estimates, resulting in us lowering of C2016 iPhone unit estimates from 237M to 226M units,” the analyst continued.
Walkley reiterated a Buy rating on Apple shares, with a price target of $160, which implies an upside of 39% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a total average return of 17.7% and a 60.9% success rate. Walkley has a 25.9% average return when recommending AAPL, and is ranked #12 out of 3795 analysts.
Out of the 50 analysts polled by TipRanks, 34 rate Apple stock a Buy, 14 rate the stock a Hold and 2 recommend a Sell. With a return potential of 28.5%, the stock’s consensus target price stands at $147.69.
Paypal Holdings Inc
William Blair analyst Robert Napoli weighed in yesterday with a favorable report on shares of Paypal, as the company is scheduled to report September quarter earnings results on Wednesday, October 28th. The analyst reiterated an Outperform rating on the stock, without providing a price target.
Napoli wrote, “We believe core fundamental trends (e.g., TPV growth, take rate and active user growth) will remain steady in the September quarter, but visibility into specifics (e.g., separation costs, reported metrics, call format) are less clear as it will be management’s first call as a stand-alone company. We expect management will affirm its 2015 guidance and its longterm objectives. Valuation appears attractive as shares trade in line with slower-growing financial technology peers but grows much faster.”
Furthermore, “We remain attracted to PayPal’s solid market position, exposure to strong secular tailwinds (e-commerce and shift to electronic forms of payment), and management’s efforts to diversify the company beyond the legacy eBay marketplace business. We believe PayPal’s 169 million active accounts and the $11.4 billion of customer funds that are stored at PayPal, which is not FDIC insured, represent a testament to consumers’ trust of PayPal and the value PayPal brings to the payments industry. We continue to believe increasing customer usage from two to three transactions per month to two to four per week remains one of the largest opportunities at PayPal.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Robert Napoli has a total average return of 6% and a 44.8% success rate. Napoli has a 9.3% average return when recommending PYPL, and is ranked #1264 out of 3793 analysts.
Out of the 23 analysts polled by TipRanks in the last 3 months, 13 rate Paypal stock a Buy, 7 rate the stock a Hold and 3 recommend a Sell. With a return potential of 19%, the stock’s consensus target price stands at $41.50.