Wall Street analysts expressed their opinions on Apple Inc. (NASDAQ:AAPL) and Twilio Inc (NYSE:TWLO) following yesterday’s earnings announcements. The analysts explained how the earnings will drive each stock forward, changing their price targets in different directions. Let’s take a closer look:
Maxim analyst Nehal Chokshi raised his price target for Buy-rated Apple from $163 to $171, as “continued low android switch rate in China, and iPhone 7 unit trajectory portends growth beyond iPhone 8 cycle.”
During the earnings conference call Apple CEO Cook said, “In terms of upgraders, we saw the largest absolute number of upgraders ever in any 6-month period in the first half of this year — first half of this fiscal year, to be precise. And we saw the — the largest absolute number of switchers outside of Greater China in the same period that we’ve ever seen.” What the quote means? Chokshi believes iPhone users in China are staying iPhone users meaning that China will stabilize.
In addition, Chokshi points out that the share gain trajectory remains in place for Apple’s iPhone in all other geographies, similar to how Mac has gained share (and grown) over the past 12 years despite a stagnating PC market.
According to Piper Jaffray analyst Michael Olson, Apple is well positioned near-term as proximity to iPhone X will capture investor attention, even if other issues emerge through the remainder of the year.
“We recommend owning AAPL due to growing anticipation around iPhone X (aka iPhone 8) and a favorable trajectory for services revenue. While some may be concerned that June quarter iPhone estimates will prove aggressive, we believe expectations for near-term iPhone units have been adequately reset and any June quarter iPhone miss would be overshadowed by investor anticipation for iPhone X,” Olson said.
As such, Olson raised his price target to $158 (from $155), while reiterating an Overweight rating on AAPL.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Nehal Chokshi and Michael Olson have a yearly average return of 14.8% and 16% respectively. Chokshi has a success rate of 61% and is ranked #613 out of 4572 analysts, while Olson has a success rate of 68% and is ranked #77.
Out of the 32 analysts polled by TipRanks (in the past 3 months), 25 are bullish on Apple stock, 6 remain sidelined, and only one is bearish. With a return potential of nearly 7%, the stock’s consensus target price stands at $158.15.
Twilio investors are wildly disappointed today after the communications software maker issued soft second-quarter guidance and lowered 2017 guidance due to significantly lower expectations on Uber contribution.
In reaction, Canaccord analyst Richard Davis reduced his price target for TWLO from $40 to $33, while reiterating a Buy rating on the stock.
Davis commented, “Uber, the company’s largest customer at 12% of revenue in the quarter, will be optimizing its communications spend based on use case and geography and is moving some of its communications in-app, which will weigh on growth for Twilio as Uber’s spend is now expected to decline y-o-y as opposed to grow as was previously the case; operating income profitability was pushed out three quarters to Q3/18 from Q4/17 previously.”
“There is no getting around the fact that the faster deceleration of Uber than expected is a negative surprise, but a 30% decline seems extreme given that the remaining ~88% of the base business grew 60% and the go-forward expected base revenue growth, including the roughly $11 million hit from Uber, is still 40%. We believe it would be ill-advised to sell while others are aggressively selling. Our expectation is that after the selling frenzy ends today or this week, TWLO shares will likely retrace about half of today’s justified beat-down in a desultory, low-volume advance, which means the stock should get close to $30 perhaps before the firm’s next earnings call in July,” the analyst continued.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Richard Davis has a yearly average return of 21.9% and a 74% success rate. Davis has a 9.6% average return when recommending TWLO, and is ranked #7 out of 4572 analysts.