Analysts are weighing in on the technology giant Apple Inc. (NASDAQ:AAPL) and software giant Microsoft Corporation (NASDAQ:MSFT), offering compelling reasons for their ratings and summarizing expectations.
BMO Capital analyst Keith Bachman believes that it is difficult to correlate any one supplier to Apple’s results, given potential changes in inventory levels and share of a supplier to Apple. However, the analyst admits that he does have concerns that consensus estimates for the December quarter appear too high.
Bachman noted, “While we don’t have visibility into our competitors’ models, we suspect that more aggressive iPhone estimates are a key driver of variance between our estimates and consensus. We project 47.3 million iPhone units in the September quarter, and total revenues of $51.0 billion and EPS of $1.89, roughly in line with consensus. However, for the December quarter, we project 72.5 million iPhone units and revenues of $73.6 billion.”
“We believe that Apple could guide revenues below consensus for the December quarter, by more than 2%. We believe that Apple will want to manage expectations not only for the December quarter but also the March 2016 quarter,” the analyst continued.
Bachman reiterated an Outperform rating on Apple shares, with a price target of $145, which represents a potential upside of 26% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Keith Bachman has a total average return of 19.8% and a 64.4% success rate. Bachman has a 32.4% average return when recommending AAPL, and is ranked #42 out of 3801 analysts.
FBR Capital analyst Daniel Ives reiterated an Outperform rating on shares of Microsoft, and raised the price target $60 (from $53), after the company delivered solid F1Q16 results that beat on both top and bottom line expectations. Microsoft Stock gained more than 10% after earnings release, while adding 2.61% today.
Ives wrote, “With many of the mature tech stalwarts (Oracle, Cisco, HPQ, IBM) on the “innovation treadmill,” Satya Nadella has instead helped navigate Microsoft toward the cloud quicker and more successfully than its peers, and it clearly was on display for all to see this quarter. Even more impressive than the top-line beat was the stronger-than-expected margin/free cash flow performance, which speaks to Microsoft’s ability to be a leaner technology giant going forward as it embarks on its next stage of cloud transformation with Windows 10.”
“With Windows 10 strong out of the gates and Microsoft posting a major inflection point quarter last night, we believe the Street is now starting to realize that the renaissance of cloud growth in Redmond is starting to take hold,” the analyst added.
According to TipRanks.com, Ives has a total average return of 5.1% and a 55.8% success rate. Ives has a 12.3% average return when recommending MSFT, and is ranked #618 out of 3801 analysts.
Out of the 21 analysts polled by TipRanks in the last 3 months, 15 rate Microsoft stock a Buy, 5 rate the stock a Hold and 3 recommend a Sell. With a downside potential of 0.11%, the stock’s consensus target price stands at $54.19.