Wall Street on Apple's 'uneventful' June quarter: Excited by margins, concerned about guidance

Analysts are largely showing faith in Apple's product cycles, expecting big things from the company this fall, including new iPhones, iPads, Macs and even a mythical "iWatch." Below, AppleInsider offers a roundup of analyst reactions to Apple's June quarter results.

Piper Jaffray

Analyst Gene Munster characterized Apple's June quarter as "uneventful," with revenue of $37.4 billion coming in slightly below expectations. He, like many others, was pleased with the company's gross margins at 39.4 percent, an achievement as the iPhone's percentage of total sales dropped from 57 percent in March to about 53 percent in the June quarter.

Munster also noted that Apple's lower-than-expected guidance for the September quarter suggests that the next iPhone could launch a little bit later than expected. He now predicts that the so-called "iPhone 6" could debut on the last Friday of September, the 26th.

"This means Apple will only benefit from 5 days of iPhone 6 sales vs. 12 in our prior expectation," Munster said.

Munster has maintained his price target of $105, which he noted does not include projections for new product categories such as a so-called "iWatch."

RBC Capital Markets

To analyst Amit Daryanani, Apple's June quarter was both good and bad, coming in "soft" on sales but beating earnings per share projections. As for the company's lower-than-expected September quarter guidance is likely indicative of a sales "air pocket" ahead of the anticipated "iPhone 6" launch.

But Daryanani also noted that last year Apple guided its September quarter sales to be flat sequentially in comparison to its June results, while in 2012 September quarter guidance was down 3 percent sequentially. This year, however, Apple's guidance implies 3 percent quarter over quarter growth.

For this reason, he has a much different take than Munster: Daryanani believes that the numbers suggest that Apple could launch its next iPhone earlier than expected, or perhaps debut a new product in the quarter.

J.P. Morgan

Analyst Rod Hall also saw Apple's fiscal third quarter as a mixed bag: The company beat expectations on revenue for the June quarter, but its revenue guidance for the fourth quarter was a miss. And while gross margin for the June quarter was strong, its margin guidance for the next quarter was also lower than expected.

Hall also characterized iPhone sales for the June quarter as "slightly weak," while the iPad was a complete miss.

Apple's big boost in the quarter came from Mac sales, which came in better than most on Wall Street anticipated.

J.P. Morgan has maintained its "overweight" rating for AAPL stock, with a price target of $108.

Morgan Stanley

Katy Huberty believes Apple's better-than-expected gross margins for the June quarter were the highlight of the three-month span for the company. She said the company's success has removed the "bear case" for margins moving forward.

She believes Apple's margin improvements were a function of lower warranty expense and favorable component costs. Looking forward, she expects higher margins on the next generation iPhone, along with an anticipated "iWatch" and continued App Store growth, to help margins even further.

Mac sales blew past Huberty's forecast by 19 percent, or almost $1 billion in total sales. That offset the iPad, which came in about $800 million below her expectations.

And while the iPhone grew a healthy amount, its 13 percent year over year growth was still lower than the 15 percent she had forecast. She said that was in part due to higher value-added tax, as well as new regulatory guidance in Japan.

Evercore

Reiterating his "overweight" rating and $115 price target, analyst Rob Cihra said that Apple's growth is now on track to reaccelerate heading into the fall. He believes investors should buy in ahead of the debut of new iPhones, which he believes will expand sales with larger screen sizes.

If Apple's growth were to reaccelerate, Cihra admitted that the company would be "pushing the law of large numbers." He sees Apple's revenues growing 11 percent year over year in fiscal 2015, driven by larger iPhones, a new "iWatch" product lineup, and ongoing App Store growth.

In the shorter term, Cihra sees Apple selling 37 million iPhones in the September quarter, before jumping to a whopping 62 million total sales in the December quarter, which would be a year over year increase of 22 percent.

BMO Capital Markets

Analyst Keith Bachman has particularly high hopes for Apple's December quarter. He expects that a 5.5-inch next-generation iPhone will have greater availability in the fall, which would help boost the company's margins at the close of 2014.

Looking to fiscal 2015, Bachman has boosted his forecast for iPhone sales from 172 million units to 179 million, while he sees earnings per share reaching $7.34 for the 12-month period. He also expects that the average selling price of an iPhone will reach $633 next year.

BMO has raised its price target from $98 to $106, and the firm has maintained its "outperform" rating.

Wells Fargo

Though iPhone sales and average selling price came in below what analyst Maynard Um expected, he said those numbers were somewhat offset by an unexpectedly strong quarter for the Mac. Apple sold 35.2 million iPhones in the quarter, up nearly 13 percent year over year, while the 4.4 million Macs it sold were up nearly 18 percent from last year.

"With the final quarter before the new product launches out of the way, the anticipation of new product demand will, in our opinion, determine the direction of the stock," Um wrote.

The analyst has been somewhat sour on shares of AAPL as of late, and has maintained his "market perform" rating with a valuation range of $86 to $96.

Cowen and Company

Analyst Timothy Acuri saw it as a "solid quarter" with "good enough guidance." He believes Apple's September quarter guidance is conservative, as Acuri thinks an "iPhone 6" with bigger screen size options has a "huge pool of upgrade candidates."

As for the iPad, he said the touchscreen tablet is now Apple's "glaring weak spot in the lineup." He thinks Apple's newly announced partnership with IBM could help drive enterprise penetration in the long-term.

Cowen and Company has maintained its "outperform" rating for AAPL stock with a price target of $106.

ISI Group

Brian Marshall is waiting for "the mother lode of all upgrade cycles" from Apple, and he believes now is the time for the company to unlock the value of its ecosystem. He said Apple's services, including iTunes, iCloud and the App Store, will play a major role in winning new users when hardware upgrades arrive this fall.

"We believe the power of these assets is about to be unlocked when AAPL releases a larger-display iPhone later this quarter," Marshall said. "In our view, this is likely to both entice Android users back to the iPhone and drive massive upgrades in the installed base."

ISI has maintained its "buy" rating with a price target of $105.

Macquarie Securities

Analyst Ben Schachter is focused on apps and the anticipated "iPhone 6." He's bullish on the next iPhone in the near-term, while he believes Apple's ecosystem of apps will drive upside into the future.

Schachter highlighted Apple's iTunes, software and services business, in which he estimates application sales were up between 35 and 40 percent in the June quarter. With high margins, he believes the total iTunes, software and services business could have accounted for as much as $2.5 billion, or 25 percent of Apple's operating profit.

Overall for the June quarter, Apple's revenue came in slightly lower than he expected, while gross margin was stronger. Macquarie Securities has reiterated its "outperform" rating and raised its price target to $102.