Analysts recently shed some light on tech companies Apple Inc (NASDAQ:AAPL) and BlackBerry Ltd (NASDAQ:BBRY). While things are looking good for Apple, Blackberry doesn’t seem to be up to par. See below what analysts have to say about these two much talked-about stocks.
Following findings from the annual CS Emerging Market Consumer Survey, Credit Suisse analyst Kulbinder Garcha reiterated an Outperform rating on Apple with a price target of $140.
The survey consists of 15,000 consumers and ~4,200 Apple users across 9 key emerging markets. Garcha noted findings that many emerging market, or EM, users portray the same purchasing behavior as other markets, in regards to loyalty and replacement. The analyst elaborated, noting, “Given far lower EM penetration for Apple, we remain of the view that this is a potential source of growth.” The analyst mentions that he believes these findings are “statistically significant” and continues to note, “the survey shows that the EM base is just as valuable as the developed market customer base, with similar replacement cycles and metrics that would support high levels of loyalty and retention.”
Garcha has derived five key conclusions from the CS EM survey. These include: Apple penetration in EM remains low at <30%; overall, lower price and local support are key drivers for EM penetration; EM replacement rate for iPhones is ~2.9 years; Apple EM users have 2.0 Apple products, and finally; Apple users are ~50% more affluent vs non Apple users.
The analyst also notes that EM’s multi compute users are expected to keep retention rates high, at >90%. More so, the replacement cycle of fewer than 3 years in EM promotes the notion that Apple’s global average of 30 months is an appropriate estimate. Garcha elaborates, claiming, “The significant potential ahead in EM penetration, and the scope to capture as many as 127mn users away from Android in EM alone keeps our conviction that units could exceed our projections.”
According to TipRanks, based on 38 analysts offering recommendations for AAPL in the last 3 months, the overall consensus is Strong Buy, with 33 analysts recommending a Buy. The average price target is currently at $133.62, with a 21.48% upside.
Following BlackBerry’s earnings report, Canaccord analyst Michael Walkley weighed in on BBRY, reiterating a Hold rating on the stock with a price target of $8.00. Blackberry reported lower than expected revenue in its Q4:16 earnings report, which was due to lower than expected hardware revenue, although software and SAF revenue were in-line with expectations. Sales for the company for fourth quarter were reported at $487M with hardware sales of $185M, software sales of $153M, and services sales of $144M.
BlackBerry released its PRIV model in November, which had a positive impact on its ASP devices. However, the company only received revenue from approximately 600K smartphone units, which relative to the company’s 850K estimate, is not impressive.
Walkley shared his thoughts regarding the quarterly revenue, noting, “While we anticipate a more targeted approach to enterprise customers for PRIV or device sales could modestly help hardware sales, we maintain our overall cautious hardware estimates. In fact, Q4/F2016 hardware revenue of $185M was below our $270M estimate and consensus of $277M.”
Additionally, the analyst mentions, “we believe the continued steep decline in high margin services business and ongoing tepid hardware sales will remain a headwind to meaningful profitability during F’17 and beyond despite improving results from software and licensing.”
Walkley concludes that while the higher ASP PRIV aided in improving hardware gross margins, the units were overall significantly below expectations. Management plans to continue to lower its hardware cost structure, though the overall volumes will likely remain at low levels, according to the analyst. This will likely make reaching break-even levels more difficult. Walkley comments on this matter, noting, “we remain impressed with overall expense controls, but view F2017 as another transitional year as the company builds its software business to offset the ongoing services decline and likely loss generating hardware business.
According to TipRanks, based on 4 analysts offering recommendations for BBRY in the last 3 months, the overall consensus is Hold, while the average price target is currently at $7.08 with a (-5.35%) downside.