Analysts from FBR & Co. and Nomura Holdings were out pounding the table yesterday on technology giant Apple Inc. (NASDAQ:AAPL) and online payment giant Paypal Holdings Inc (NASDAQ:PYPL). The analysts reflect on Apple’s upcoming earnings report and Paypal’s long-term outlook.
FBR & Co. analyst Daniel Ives reiterated an Outperform rating on shares of Apple, with a price target of $150, as the company is scheduled to report earnings for the first quarter of the current fiscal year on January 26.
Ives wrote, “As we head into Apple’s much anticipated FY1Q16 (Dec.) earnings report on January 26, we believe fears are mounting around weakening iPhone guidance on tap for the March quarter. While we expect a generally in-line FY1Q16 with a 75M-plus iPhone unit number viewed as the Street bogey, investor eyes will be more focused on Cook’s comments around China and, importantly, March/June guidance. We believe all-important China iPhone demand is very robust and holding up well, while U.S./EMEA sales have been the Achilles’ heel of this 6s product cycle, in our opinion.”
“That said, at this point, the NYC cab driver knows that Apple has seen less-than-stellar demand for the 6s out of the gate with Asia supply chain data and Apple store checks all pointing to softness heading into the March quarter, and the Street appears to be bracing accordingly. While we acknowledge this “turbulent” period for Apple (and its investors) as 6s iPhone units have come down across the Street for FY16, we believe bearish sentiment has overreached, as Cook likely has a relatively low iPhone unit bar (50M as the key threshold) for the dreaded March quarter in the countdown to the mega iPhone 7 product cycle,” the analyst continued.
According to data compiled by TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Daniel Ives has a yearly average return of -0.8% and a 41% success rate. Ives has a -16.2% average return when recommending AAPL, and is ranked #2444 out of 3585 analysts.
Out of the 53 analysts polled by TipRanks, 39 rate Apple stock a Buy, 11 rate the stock a Hold and 3 recommend a Sell. With a return potential of 44%, the stock’s consensus target price stands at $140.02.
Paypal Holdings Inc
Nomura Holdings analyst Bill Carcache reiterated a Buy rating on shares Paypal, with a price target of $46, as he thinks there’s room for PYPL in the payments ecosystem and expects investor buy-in over time.
Carcache noted, “Although PYPL has delivered robust total payment volume (TPV) growth for the past decade, it only recently started trading again as a standalone public company. Our meetings in recent months make it clear that many investors remain on the fence and are seeking evidence of the viability of PYPL’s business model before committing capital, even if it means having to pay more to establish a position later. We view PYPL as an endgame player in the payments ecosystem and believe the runway for growth is large enough to support EPS growth in the high-teens to low-20% range, but we acknowledge that it will take time to build the believer base.”
According to TipRanks.com, analyst Bill Carcache has a yearly average return of 12% and a 71% success rate. Carcache has a -20.6% average return when recommending PYPL, and is ranked #117 out of 3585 analysts.
Out of the 33 analysts polled by TipRanks, 21 rate Paypal stock a Buy, 8 rate the stock a Hold and 4 recommend a Sell. With a return potential of 30%, the stock’s consensus target price stands at $41.90.