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Led by the blockbuster debut of the iPhone 7 series, Apple exceeded Wall Street's expectations with its holiday quarter, sending shares of the company's stock higher and prompting analysts to revise their price targets upward.
In particular, Macquarie Securities, RBC Capital Markets, and Guggenheim all increased their estimates for AAPL following the company's December quarter results, which reached a record-setting $78.4 billion in revenue and $17.9 billion in net profit.
Analyst Ben Schachter of Macquarie, in particular, has the highest 12-month valuation for Apple at $156. In a note to investors on Wednesday, a copy of which was provided to AppleInsider, he said that the continues growth of Apple's "Services" business should command more attention going forward.
Driven by the success of the App Store, Apple's Services business drew $7.17 billion in revenue in the company's first quarter of fiscal 2017. With 30 percent growth year over year already, Apple has said it plans to double its Services revenue over the next four years.
Schachter has been bullish on Apple's Services business, but the ambition expressed by the company's management during its quarterly earnings conference call on Tuesday exceeded even the analyst's lofty expectations. As a result, he now expects that the Services business segment will generate 25 percent of Apple's gross profits in fiscal year 2017, despite accounting for only 13 percent of the company's revenue.
Amit Daryanani of RBC Capital Markets also increased his price target on AAPL from $125 to $140. Shares of the company exceeded $125 in intraday trading on Wednesday, overing above $127 as of publication.
Thanks to a number of factors — including an anticipated "super cycle" for the rumored redesigned "iPhone 8," as well as the possibility of tax breaks for overseas cash — Â Daryanani wondered if Apple could manage to exceed $10.00 in earnings per share.
Guggenheim analyst Robert Cihra also increased his target for Apple from $140 to $150, declaring the company's holiday quarter should be "more than enough to scare bears and wake up investors." He cited a number of upcoming catalysts, including the anticipated "iPhone 8," more than $231 billion in overseas cash that could be repatriated, and spending on research and development that has more than doubled over the last four years.
"We see investors being paid to own the stock," Cihra wrote.
Finally, Cowen and Company analyst Timothy Arcuri did not increase his price target from $135, but called that price now a "veritable layup." In his view, share prices as high as $150 would be possible if his bullish estimates hold.