Brean Capital analysts Ananda Baruah and Sarah Hindlian weighed in today on the technology giant Apple Inc. (NASDAQ:AAPL), ahead of its upcoming earnings, and on the cloud computing giant salesforce.com, inc. (NYSE:CRM), as a deeper integration of the customer lifecycle capture across cloud products.
Apple Could Again Drive $0.20 EPS Upside; 2H15 & ’16 Setting Up Nicely
Analyst Ananda Baruah continues to believe that Street numbers are materially low through ’17. Fundamentally speaking, Baruah believes Apple stands to deliver material EPS upside from 1) iPhone shipments through ’17, 2) favorable GM from both iPhones and iPhone mix (more 6 Plus’ than realized), and 3) materially more Opex $ leverage through at least ’16 as AAPL realizes the benefits from the recent iPhone 6 and iWatch investment cycles.
The analyst noted, “For the Jun Q, we believe AAPL can deliver EPS of $1.90 – $2.00 (vs. Street of $1.77). Specifically, our work suggests that Jun Q revenue and GM could be $52.5B – $53.0B (vs. Street estimate of $48.8B) and 40.0% – 40.3% (vs. Street estimate of 39.6%), respectively. AAPL reports on July 21 AMC.”
The analyst reiterated a Buy rating on AAPL with a price target of $170.00, which represents a potential upside of 35% 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 Ananda Baruah has a total average return of -3.7% and a 35.8% success rate. Baruah has a -3.0% average return when recommending AAPL, and is ranked #3486 out of 3691 analysts.
Analyst Sarah Hindlian came out with a favorable report on CRM, upgrading the stock to a Buy from a Hold rating and establishing a price target of $85, which implies an upside of 23% from current levels.
In her research report, Hindlian wrote, “We believe the upsell opportunity on Marketing & Services Clouds is now better aligned with core Sales Cloud customer needs and will aid in growing New ACV in FY’17 and beyond. In our analysis, we highlight: 1) the importance of upsell in the SaaS business model, and its significance to Salesforce.com given the size of its installed customer base; 2) our findings based on work with marketers of pent-up demand for better ad management tools, which we expect will drive Marketing Cloud as new products roll-out; and 3) changes in customer service trends, which we anticipate will continue to positively impact Service Cloud.”
Furthermore, “We believe deeper cross-cloud integration and product improvements will aid upsell, billings, and subsequent revenue growth, even as op. margins continue to advance. As a result, we are conservatively increasing our FY’17 and FY’18 Total Revenue estimates from $7.89bn to $8.0bn, and from $9.65bn to $9.75bn, ~1% and ~3% above consensus, respectively.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sarah Hindlian has a total average return of 2.6% and a 57.1% success rate. Hindlian is ranked #1988 out of 3691 analysts.