Wall Street is under gripping anticipation as Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) prepare to roll out how the dice fell for them for the first financial quarter of the year. BMO Capital and Pacific Crest alike echo bullish sentiments on these two towering titans of the industry, from Apple’s good odds set-up heading into the 10th anniversary model of the iPhone to Amazon’s new game plan to gain consumers of a less wealthy variety for Amazon Cash and Amazon Prime monthly. Let’s take a closer look:
Apple: All About That New iPhone
Apple is set to deliver its second fiscal quarter earnings next Tuesday, May 2nd. Yet, for BMO Capital analyst Tim Long, the big picture for the tech giant boils down to the new iPhone cycle, and less about the print.
As such, the analyst is out with a bullish note, reiterating an Outperform rating on shares of AAPL with a $160 price target, which represents a just under 11% increase from where the stock is currently trading.
First, Long explains, “We believe the stock is less about March results and June guidance, as all eyes are on the product cycle coming this year,” prepping investors to ready themselves for upside to the stock.
Especially considering that “ASP strength coming,” the analyst points out, “Our estimates for the out quarters are generally above, mostly on ASP. We believe the Street underestimates the ASP impact of the new devices that should come in the September time frame. We believe a higher percentage of iPhone users are mixing up to the top tier, and we expect a bigger move with the new OLED version.”
Overall, while “Last year, we liked the setup into the iPhone 7,” odds have actually improved, with Long concluding, “We believe this year the setup is even better. We believe 31% of iPhone users will have a phone that is at least 2 years old, versus 26% last year. […]”
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 Tim Long is ranked #264 out of 4,571 analysts. Long has a 64% success rate and realizes 12.9% in his annual returns. When recommending AAPL, Long yields 28.8% in average profits on the stock.
TipRanks analytics indicate AAPL as a Strong Buy. Out of 36 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 7 remain sidelined, and 1 is bearish on the stock. With a return potential of nearly 7%, the stock’s consensus target price stand at $154.07.
Amazon’s Trying to Entice New Customers to Prime
When previewing Amazon’s first quarter results expected tomorrow following the final peal of the bell, Pacific Crest analyst Edward Yruma believes Amazon is ready to start “tapping the other 49%” of prospective Amazon Prime members, taking aim to reach out to a wider working-class range for its consumer base.
Ahead of earnings, the analyst reiterates an Overweight rating on AMZN with a price target of $961, which represents a 6% increase from where the shares last closed.
Yruma highlights, “We believe that AMZN continues to gain share in retail and at AWS. However, our KBCM Consumer Survey shows Prime membership has reached 51% of U.S. households, so AMZN is taking steps to attract less-affluent consumers,” adding that these endeavors “[…] point to early signs of success” and vast opportunities. “Efforts like private-label provide attractive entry price points and continued investments in video should help drive Prime renewal,” notes Yruma.
Secondly, “We remain attentive to any signs of the AMZN vs. WMT retail battle intensifying,” continues the analyst, who expects that “the recent initiation of Walmart’s in-store pickup discounts […] opens the early innings of a potential price battle.”
Ultimately, “For 1Q, we remain at consensus on revenue but below on EPS as we see continued deleverage on fulfillment expenses. Hypergrowth at AWS is likely to moderate this year and next, falling below 40% y/y as alternative cloud platforms emerge,” Yruma contends, calling for $31.6 billion in revenue for the first quarter.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst Edward Yruma is ranked #1,802 out of 4,571 analysts. Yruma has a 52% success rate and earns 2.4% in his yearly returns. When recommending AMZN, Yruma gains 22.2% in average profits on the stock.
TipRanks analytics show AMZN as a Strong Buy. Based on 35 analysts polled by TipRanks in the last 3 months, 33 rate a Buy on Amazon stock while 2 maintain a Hold. The 12-month average price target stands at $997.61, marking a nearly 10% from where the stock is currently trading.