It’s a big day for technology and consumer earnings as Apple Inc. (NASDAQ:AAPL) and Alibaba Group Holding Ltd (NYSE:BABA) released their most anticipated earnings reports today. Analysts from Piper Jaffray and Axiom weigh in on the earnings results.
Apple has officially released its earnings results from its fourth fiscal quarter, posting $51.5 billion in revenue and EPS of $1.96. Leading up to Apple’s earnings announcement, the consensus was for Apple to deliver revenue of $50.98 billion and EPS of $1.88 per share. Additionally, the tech giant guided Dec-15 revenue to $75.5-77.5 billion, compared to consensus estimate of $76.8 billion.
Piper Jaffray analyst Gene Munster was the first to comment: “Our early take is that the guide seems to imply flattish (74-76 million) iPhones for December. This would imply iPhone units down 1% to up 2% y/y. We view this as a relief given investors were bracing for the start of the 6S cycle to be down meaningfully (down 5-8% y/y). We believe the December guide sets the tone for the life of the 6S cycle and we remain comfortable with slight y/y growth for the cycle. We expect comfort in the 6S cycle will allow investors to increase their optimism around the iPhone 7 and a potential Apple Watch acceleration in 2016.”
Munster rates Apple shares an Overweight, with a price target of $172, which represents a potential upside of 50% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a total average return of 23.4% and a 68.5% success rate. Munster has a 25.8% average return when recommending AAPL, and is ranked #1 out of 3802 analysts.
Out of the 49 analysts polled by TipRanks, 35 rate Apple stock a Buy, 12 rate the stock a Hold and 2 recommend Sell. With a return potential of 30.1%, the stock’s consensus target price stands at $149.
Alibaba Group Holding Ltd
In a research report issued today, Axiom analyst Victor Anthony reiterated a Buy rating on shares of Alibaba, while raising the price target to $92 (from $85), after the company released its fiscal second-quarter results. The Chinese e-commerce giant posted revenue of 22.2B RMB, which was 6% above Axiom’s estimate and 3% ahead of consensus with growth accelerating 3.4pts to 31.7%.
Anthony wrote, “The outperformance was due to higher than expected mobile GMV monetization. We had lowered our estimates in September following cautious company comments on the China macro and the currency devaluation, making the case for outperformance less robust. The company again appeared to brush off the macro challenges and reiterated past comments that high wage growth and savings painted a positive picture for the consumer.”
“We remain cautious as the China macro picture is likely to be a headwind near-term but the strength of the ecosystem should allow BABA to continue to deliver strong results. Adjusted EBITDA margin of 50.3% declined from 57.7% in F3Q1 5 and 52.3% in FY1Q16 but came in above our estimate of 49.3% and the consensus of 47.5%. Margins beat estimates but nonetheless followed a multi-quarter declining margin trend on investments in lower-margin businesses,” the analyst continued.
The analyst concluded, “An inflection point here would be a material positive for the stock, but visibility on that occurring is low.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Victor Anthony has a total average return of 15.5% and a 62.5% success rate. Anthony has a -5.2% average return when recommending BABA, and is ranked #62 out of 3802 analysts.
Out of the 34 analysts polled by TipRanks, 32 rate Alibaba Group stock a Buy, while 2 rate the stock a Hold. With a return potential of 22%, the stock’s consensus target price stands at $96.67.