Everyone is talking about Apple Inc.’s (NASDAQ:AAPL) forthcoming iPhone 8 launch- but word on the Street has it that the tech giant’s performance could be an even bigger home run out of the league of expectations than anticipated. Meanwhile, Twitter Inc (NYSE:TWTR) is rebounding some lost steam under CEO Jack Dorsey’s live video-centered direction, adding a new Periscope Producer API tool into the mix. What are the analysts’ take on these two tech leaders? One analyst is increasingly encouraged on Apple’s massive iPhone potential, lifting the price target, whereas a top analyst from Wall Street makes a bullish case for Twitter’s not-so-secret live video weapon against the competition. Let’s take a closer look:
Apple Is Full Speed Ahead
Nomura analyst Jeff Kvaal is confidently on board the Apple train as it races along the tracks toward the much-buzzed about iPhone 8 launch. After assessing App Store data points and on the heels of a key tour through Asia, the analyst is feeling more bullish than ever on the tech giant’s prospects, reiterating a Buy rating on shares of AAPL while raising the price target from $135 to $165, which represents a just under 17% increase from where the stock is currently trading.
From Kvaal’s eyes, the “large iOS base makes consensus FY18 iPhone estimates look meager,” explaining, “The consensus 239mn unit view would require both growth in the iOS base and the replacement rate to match the 7 cycle. We consider both unlikely; AT&T expects the upgrade rates to return towards iPhone 6 levels. We model 10% growth in the base and an upgrade rate midway between the 6 and the 6s/7.”
Moreover, “Even accounting for inventory builds and initial low yields, we believe Apple is preparing to ship easily 45mn-60mn iPhone 8s. As suppliers expect the 8 to be ~50% of total units, this translates to 90+mn total phones vs. consensus of 82mn and should materially lift ASPs. We note some risk as volume production commences in October, which may push some demand into F2Q or to the 7s . . . though not likely to Android,” continues Kvaal, considering expectations for Samsung to ship 80 million OLED displays Apple’s way as well as a separate supplier sending between 105 to 110 million 3D camera sensors in the back half of this year.
Though the analyst has “love” for Apple’s Services segment, he carefully adds that unit volumes will be an indication for growth. Thankfully for the second fiscal quarter, Sensor Tower points to App Store revenue growth surging nicely over 40%.
For 2017, the analyst is more positive, expecting 87 million iPhones for the first fiscal quarter, compared to consensus calling for 82 million iPhones. Moreover, for 2018, the analyst expects to see iPhone units rise to 260 million, a significant step up from consensus at 239 million. Increasing his ASP projection for the fiscal year of 2018 from $650 to $695, the analyst subsequently hikes his EPS forecast for fiscal 2018 from $10.42 to $11.01, even in face of margin projections that are a tad reduced.
“Our analysis of App Store data and recent Asia Tour insight fuel our conviction that the iPhone 8 super cycle will be significantly larger than consensus anticipates,” Kvaal concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Jeff Kvaal is ranked #280 out of 4,552 analysts. Kvaal has a 63% success rate and garners 15.6% in his annual returns. When recommending AAPL, Kvaal gains 23.8% in average profits on the stock.
TipRanks analytics show AAPL as a Buy. Out of 36 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 6 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 8%, the stock’s consensus target price stands at $152.18.
Twitter Takes on Live Video
Twitter shares are rising almost 3% on back of the social media giant’s exciting introduction to its new way to share live video: the Periscope Producer API. Top analyst Brian Fitzgerald at Jefferies sees Twitter’s live-video direction as a strategic move, with the API specifically targeting big media firms as well as broadcasters. The feature enables creators to connect directly to Twitter for video live-streaming on the network.
Praising the evolution from Twitter’s Periscope Producer launch just five months ago that already has “nearly doubled” Persicope quarterly broadcast totals to the API, the analyst reiterates a Buy rating on TWTR with a price target of $20, which represents a close to 31% increase from where the shares last closed.
Believing CEO Jack Dorsey’s Twitter reign is advantageous to the company’s rehabilitation and development, Fitzgerald notes, “Twitter remains focused on its live, real time nature which @jack laid out in his top priorities: 1) ‘fixing the broken windows of the core service’; 2) expansion of live streaming video; 3) creators and influencers; and 4) user safety. Since @jack’s return there has been a focus on a leaner and more nimble Twitter with a focus on the core product offerings. We view this transition as a continuation of this focus of streamlining operations to allow Twitter to innovate and deploy updates rapidly.”
Above all, “live video continues to be a high priority” for the giant, as “The announcement emphasizes Twitter’s continued focus on live-video streaming as they look to improve the user experience and increase engagement. We look for Twitter to continue its push into live video as they compete with the likes of Facebook, YouTube, and other social media platforms,” Fitzgerald contends.
Brian Fitzgerald has a very good TipRanks score with a 71% success rate and a high ranking of #68 out of 4,552 analysts. Fitzgerald realizes 15.5% in his yearly returns. However, when suggesting TWTR, Fitzgerald loses 30.3% in average profits on the stock.
TipRanks analytics exhibit TWTR as a Hold. Based on 30 analysts polled by TipRanks in the last 3 months, 4 rate a Buy on Twitter stock, 16 maintain a Hold, while 10 issue a Sell. The 12-month average price target stands at $14.83, marking a 2% loss from where the stock is currently trading.
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