Don’t Worry About Apple- Guggeinheim Makes Bullish Case for iPhone 8 Delay
Rumor has it that the slated new iPhone launch from Apple Inc. (NASDAQ:AAPL) is running on a delay. While Guggenheim analyst Rob Cihra acknowledges the tech titan is facing some monsters in the closet down the road, one of these issues is not like the other- or in other words, a quick postponing of the upgraded iPhone 8 does not make the list. Not only that, but Cihra argues any near-term challenges that spring up from an iPhone 8 push-out will just delay Apple’s success rather than canceling it out.
As such, with every confidence that investors should “expect [a] strong iPhone irrespective of timing,” the analyst reiterates a Buy rating on shares of AAPL with a $180 price target, which represents a just under 21% increase from current levels. (To watch Cihra’s track record, click here.)
Apple’s forthcoming iPhone cycle is going to cannon the titan into “its biggest in 3 years, coming after 2 middling years,” argues the analyst, who wagers this will be an upgrade cycle lasting many years. Taking under account ASPs that could soar upwards $800, to which Cihra underscores that those might “balk at those prices” must also remembered the original iPhone was once considered quite costly at $499 just a decade ago.
Overall, “We believe Apple has some valid long-term issues that ultimately matter for the stock (e.g., size, elongating smartphone replacement cycles, China, Services) but do NOT think any short-lived delay launching its new high-end iPhone 8 SKU qualifies as one of them. Rather, we believe its UNIQUE iOS means loyal users will WAIT, so any units pushed out of CY17 would just be pushed into CY18. Given the stock trades on forward numbers, that could even end up a boost, similar to how we see limited supply of OLED screens turning this iPhone into a 2-3 year upgrade cycle; helping push macro hurdles out to 2019-20E. Apple reports Jun-qtr earnings on Aug 1 and we remain 3c ahead of consensus. We cut our Sep-qtr/FY17E EPS by 18c for a further delayed launch of iPhone 8 but just push that into FY18E, which pushes our EPS to >$11, now 50c ahead of consensus,” Cihra contends, bullish in the titan’s corner.
Ahead of the third fiscal print due August 1st, the analyst is calling for a 7% year-over-year rise in revenue to $45.1 billion and a 12% year-over-rise in EPS to $1.60. For the fourth fiscal quarter, the analyst may have cut his revenue expectations from $52.1 billion to $49.0 billion and EPS from $1.98 to $1.80, but factoring in a later launch, tweaks his fiscal 2018 EPS expectations from $10.80 up to $11.05.
TipRanks analytics show AAPL as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 24 are bullish on Apple stock while 7 remain sidelined. With a return potential of 10%, the stock’s consensus target price stands at $165.24.
Netflix Brings in a Big Second-Quarter Outclass of Expectations
Netflix, Inc. (NASDAQ:NFLX) came in strong yesterday after the close with robust second financial quarter earnings, including “record” highs in subscriber additions for the quarter coupled with subscriber growth outlook that beat consensus expectations looking ahead to the third quarter. Top analyst Michael Graham at Canaccord takes this in confident stride for the video streaming giant, believing “content fuels subscriber growth” led to a beat of projections already “at the high end of expectations.”
For the second financial quarter, Netflix yielded 1,067,000 in total subscriber net additions on a domestic front, handily beating consensus of 631,000, while trouncing consensus expectations for total international subscriber net adds of 2,593,000 with a robust 4,137,000.
On the heels of stellar subscriber momentum and a “strong guide despite some pull forward,” the analyst reiterates a Buy on NFLX stock while lifting the price target from $175 to $200, which represents a close to 24% increase from where the shares last closed. (To watch Graham’s track record, click here.)
“In addition, management indicated an expectation that 2017 contribution profit from the international streaming business would be positive, which aligns well with last quarter’s comments regarding a renewed focus on global profitability. The company’s content strategy continues to deliver results, and we liken NFLX’s apparent mentality around cash flow (spend as much as makes sense within a modest cash burn and leverage framework) to AMZN’s mentality around profit (invest as much in fulfillment and international growth as possible while keeping margins close to zero). We therefore expect improving profitability to enable more (conservative) leverage and significant growth in original content spend over the next few years. As long as this continues to drive strong subscriber growth, we believe the stock can generally keep working despite a premium valuation,” surmises Graham, commending Netflix for an overall “impressive” quarterly performance.
TipRanks analytics demonstrate NFLX as a Buy. Based on 24 analysts polled by TipRanks in the last 3 months, 17 rate a Buy on Netflix stock, 6 maintain a Hold, while 1 issues a Sell on the stock. The 12-month average price target stands at $175.14, marking an 8% upside from where the stock is currently trading.
Amazon Ecosystem Value Looks Solid in Long-Term
UBS analyst Eric Sheridan is out with a bullish research note on Amazon.com, Inc. (NASDAQ:AMZN) where he takes another crack at the online auction and e-commerce leader’s well-framed long-term, believing the company’s prospects are primed to “drive overall Amazon ecosystem value.”
Appreciating “the drivers of sustained ecosystem strength,” even as he considers the stock’s movement year-to-date, the analyst remains bullish on Amazon’s “long-tailed opportunities,” reiterating a Buy rating on the stock while raising the price target from $1,100 to $1,200, which represents a 19% increase from where the stock is currently trading. (To watch Sheridan’s track record, click here.)
Sheridan opines, “[…] Most notably, we point investors to a) Prime membership (FY2017 average UBSe: 63mm in North America; 34mm in Int’l) that has consistently driven increased shopping velocity among members; b) 3P mix (including Fulfillment by Amazon) to improve choice/breadth of product selection; c) Advertising – still early days but ramping quickly as Amazon captures market share of product search & present advertisers with a unique blend of identity & intent; & d) AWS – market leader (& will remain as such) as cloud computing penetration curve points to continued strength and market share concentration among a few key players.”
“As a result of that, we feel comfortable recommending Amazon as a Buy despite its strong YTD stock performance. With many avenues of growth ahead, we think that investors are much more likely to remain focused on topline opportunities vs. the quarterly cadence of profit margins,” underscores Sheridan, who keeps his eyes on forthcoming rises in regulatory pressure, but largely roots for the management team’s long-term investment strategy.
TipRanks analytics exhibit AMZN as a Strong Buy. Out of 28 analysts polled by TipRanks in the last 3 months, 25 are bullish on Amazon stock while 3 remain sidelined. With a return potential of nearly 12%, the stock’s consensus target price stands at $1,130.39.