Apple (AAPL) Shredded Wall Street’s Fears; Analyst Provides First Glance

Apple (NASDAQ:AAPL) shares are getting a boost on the back of Tuesday’s evening’s fiscal second-quarter earnings report. The tech titan put to rest some of the market’s concerns about whether the phone’s $1,000 price tag would hurt iPhone sales. Instead, Apple reported that the iPhone X drove it to record revenue for its second quarter.

Apple delivered total revenues of $61.1 billion which was within guidance of $60 billion to $62 billion. Gross margins were also in line with the Street with EPS coming in at $2.73 vs. the Street at $2.67. iPhone units shipped in the quarter were 52 million vs. Street expectations of 52 million. Looking ahead, the company guided to total revenues for the June quarter of between $51.5 billion to $53.5 billion vs. the Street at $51.5 billion.

In addition, the company announced an additional $100 billion stock buyback program (and will finish its existing $210 billion plan).

In reaction GBH analyst Daniel Ives maintains his Highly Attractive rating on Apple shares, along with a $200 price target, which implies an 18% premium to today’s closing price. (To watch Ives’ track record, click here)

Ives commented, “While the Street (and the stock) have been reflecting soft June guidance, the big question now is what will the demand picture look like post June with a much anticipated three pronged smartphone product cycle around the corner and will this finally be the product catalyst to turn things in the right direction for Cook & Co. To this point, we continue to believe the Apple iPhone upgrade story for 2018/2019 is still intact and it’s time to take a deep breath as despite soft demand spots from the iPhone X coming out of China and the US over the last few months, the product cycle thesis out of Cupertino is delayed/elongated rather than gone forever in our opinion, which is supported by the company’s underlying metrics and June guidance front and center.”

“We estimate Apple has roughly 350 million iPhones that are in the window of opportunity to upgrade over the next 12 to 18 months, now it’s about which model and price point “strike a chord” for these customers to ultimately upgrade as the iPhone X demand has softened materially since reaching a supply/balance level in late December,” the analyst added.


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