Analysts are weighing in on the technology giant Apple Inc. (NASDAQ:AAPL) and online payment giant Paypal Holdings Inc (NASDAQ:PYPL), with a cautious stance.
In a research report released today, Pacific Crest analyst Andy Hargreaves reiterated a Sector Weight rating on Apple shares, with a price target of $132, as the company will announce its earnings for the fourth fiscal quarter of 2015 on Tuesday, October 27.
Hargreaves noted, “We expect FQ4 results to be in line with consensus expectations for revenue and EPS of $51.0 billion and $1.88, respectively. We are increasing our FQ1 iPhone unit estimate to 66.9 million from 62.4 million, but believe our estimate remains below both buy-side and sell-side expectations. We expect a lower-than-expected iPhone unit outlook to prompt FQ1 revenue guidance well below the Street estimate of $76.4 billion.”
Furthermore, “We expect iPhone gross margin to be relatively stable in the near term as pricing action in certain international markets and normal cost reductions should offset an estimated increase in component costs in the 6s vs. the 6. Longer term, we view the potential for declining iPhone gross margins as the key risk. We will look for signs of trade-downs as evidence of weakness in our thesis that iPhone gross margins can remain stable over the long term.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andy Hargreaves has a total average return of 34.6% and a 71.7% success rate. Hargreaves has a 28.3% average return when recommending AAPL, and is ranked #28 out of 3770 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 33%, the stock’s consensus target price stands at $147.90.
Paypal Holdings Inc
Evercore ISI analyst Ken Sena came out today with a bearish call on Paypal shares, reiterating a Sell rating and reducing the price target to $31 (from $36), which reflects a potential downside of -5% from last closing price.
Sena commented: “With PayPal shares down 19% since trading regular way Monday 7/20, we have been getting many questions. A few of them we thought could be helpful to walk through with readers, including why we are below Street this quarter, our sense of whether valuation now reflects our near and longer-term concerns, and what would cause us to become more constructive on shares. For now, our thesis remains relatively unchanged, and while our below-consensus estimates for the quarter does mostly already factor these concerns, as well as a few one-timers that the Street doesn’t seem to be fully capturing, we are taking this opportunity to downwardly revise our net transaction margin in the out years, which leads us to shave $5 off our target price to $31.”
According to TipRanks.com, analyst Ken Sena has a total average return of 6.1% and a 53.1% success rate. Sena has a 19.2% average return when recommending PYPL, and is ranked #726 out of 3770 analysts.
Out of the 30 analysts polled by TipRanks, 21 rate Paypal stock a Buy, 6 rate the stock a Hold and 3 recommend a Sell. With a return potential of 29%, the stock’s consensus target price stands at $42.16.