Analysts Weigh In on Apple Inc.’s (AAPL) Earnings
Apple Inc. (NASDAQ:AAPL) shareholders are having a rough evening as shares of the tech giant are down nearly 8% in after-hours trading, following a disappointing earnings report. Apple reported fiscal second-quarter earnings of $1.90 per diluted share on $50.56 billion in revenue, compared to consensus estimates of about $2 a share on $51.97 billion in revenue. Apple also offered a cautious 3Q:FY16 outlook as the company enters the final stages of the iPhone 6-Series cycle.
Analysts Gene Munster of Piper Jaffray and Brian White of Drexel Hamilton were the first to comment:
Munster: “Mar-16 results and Jun-16 guidance appear negatively impacted by a sharp deceleration in China as revenue from Greater China was down 26% y/y vs total revenue down 13% y/y. China grew 14% y/y in Dec-15. While iPhone was slightly ahead of the Street at 51.2 million, our early take on June guidance seems to imply 39-40 million units, down 16-18% y/y. Overall we see few bright spots in the March report and June guide, but continue to expect the iPhone 7 cycle will result in a return to growth in Dec-16. While shares are down given the disappointing report, we believe that optimism around the iPhone returning to growth will prove to be a catalyst to shares mid-2016.”
White: “Apple just reported 2Q:FY16 sales of $50.56 billion (down 13% YoY) that missed our estimate of $52.34 billion and the Street estimate of $51.98 billion, while pro forma EPS of $1.90 fell short our $1.99 projection and the Street (Street was at $2.00). This 33% QoQ sales decline is the sharpest March quarter decrease that we have on record and well below the five-year average of down 17% for past March quarters. Recall, Apple’s 2Q:FY16 outlook called for sales of $50-53 billion […] Given the late stages of this 6-Series cycle and growing macro volatility, it is not surprising that Apple’s 3Q:FY16 outlook is cautious. For 3Q:FY16, Apple expects sales of $41-43 billion that is below the Street and lower than our estimate of $44.55 billion, while gross margin is expected at 37.5-38%.”
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gene Munster and Brian White have a total average return of 19% and 8% respectively. Munster has a success rate of 63.5% and is ranked #4 out of 3906 analysts, while White has a success rate of 54% and is ranked #155.
Out of the 36 analysts polled by TipRanks (in the past 3 months), 33 rate Apple stock a Buy, while 3 rate the stock a Hold. With a return potential of 30%, the stock’s consensus target price stands at $136.80.