Neil Hughes
With a better-than-expected iPhone 8 launch quarter, and a highly anticipated debut for the flagship iPhone X, investors on Wall Street are riding high on Apple stock, pushing shares into uncharted territory as analysts increase their forecasts to trillion-dollar market cap levels.
As of early Friday morning trading, shares of AAPL were up more than $6 to about $175, following a strong earnings report where the company saw revenue grow 12 percent to $52.6 billion. After markets opened, shares cooled off slightly, but remain higher after Apple's impressive September quarter.
Following the news, analysts offered their reactions with new, higher price targets, and AppleInsider offers a roundup of their thoughts.
RBC Capital Markets
Analyst Amit Daryanani raised his price target to $190 and maintained an "outperform" rating for shares of AAPL after the company's September quarter earnings. He declared the result an "impressive beat," and noted that Apple's guidance for its next fiscal quarter are even better than expected.
Daryanani sees Apple's iPhone X and higher memory options in the iPhone 8 lineup helping to drive average selling prices higher for this product cycle. He also believes Apple's gross margins will be helped by those shifts, as well as a growing services business.
His forecast calls for Apple to ship 80.6 million iPhone units in the December quarter, which would be a 3 percent year-over-year increase and a new record for the company.
iPhone X availability is expected to improve going into 2018 and the following March quarter, and Daryanani is encouraged that next year will get off to an even better start than Wall Street expects.
Guggenheim
Apple's 2018 calendar year remains the "main event" for analyst Robert Cihra, who increased his price target on AAPL to $215 and maintained a "buy" rating.
"We continue to see Apple setting up for its biggest iPhone up-cycle in 3 years, driven by pent-up demand + multi-year OLED rollout + meaningfully higher ASPs," Cihra wrote. "Double-digit unit growth times double-digit ASP increases drives our forecast for ongoing reacceleration."
He believes Apple's fiscal year 2018 will post revenue of $286 billion, far higher than Wall Street consensus of $266 billion.
Loup Ventures
"Tim Cook is giddy, and he should be," analyst Gene Munster wrote, noting that it's the first time since the December 2014 quarter that Apple saw growth in every product and every geography.
Munster highlighted Apple's services business, which grew 24 percent year over year, accelerating from the 22 percent growth it posted in the preceding June quarter. Services also exceeded Wall Street expectations of 17 percent growth.
Apple also returned to growth in China, where sales were up 12 percent year over year.
As for the iPhone X, Munster believes that Apple is in a position to exceed expectations with regards to supply and demand.
"We believe demand for the iPhone X will, over the next four quarters, play out to be slightly more favorable than increasingly optimistic analyst estimates," he said.
Macquarie Research
Analyst Ben Schachter also increased his target for AAPL to $188, and reiterated an "outperform" rating. He noted that despite growing in sales, the iPhone was not actually the standout product, as services, Mac, iPad and wearables all drove upside.
"This broad foundation, combined with the iPhone X, allowed the company to guide Dec. above expectation," Schachter wrote. "Apple is simply delivering across the board."
He said that Apple is currently dominating the high-end smartphone and associated services market. He's bullish on the iPhone X, calling it the most innovative iPhone in years, and seeing it drive the company's stock even higher.
GBH Insights
The possibility of a trillion-dollar market cap milestone — long discussed with regards to Apple, but never actually becoming a reality — could now be on the near-term horizon, analyst Daniel Ives told investors.
GBH has a valuation target for AAPL between $190 and $200, and rates the stock as "highly attractive."
Ive said that Apple's September quarter was a "blow out" result, and yet the three-month period is just "popcorn for the real feature movie in Cupertino:" the iPhone X launch and ramp up.
To him, as the iPhone X "super cycle" ramps up over the next year, it could push shares of AAPL to a trillion-dollar market cap.
With Friday morning's gains, Apple's market cap was at about $886 billion, giving the company still some distance to go before achieving that.
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25 Comments
He believes Apple's fiscal year 2018 will post revenue of $286 billion, far higher than Wall Street consensus of $286 billion.
Good initial customers' reaction to the $1000+ iPhone X. Disappointment to those who said that the iPhone X would not sell because it is too expensive. :D
Who bought Apple stock when it's down a few weeks ago is a genius.
Gee...wasn't the word just about two weeks ago that Apple had cut back on parts orders for the iPhone 8, which the media and analysts were already claiming was a failure and Apple was going to do lousy because they were having production problems with the iPhone X and/or it was too expensive? And hasn't the longer term story been that Apple doesn't innovate and is still a one-product company?
It's amazing to me how the analysts are wrong just about every single time, then Apple surprises them and they're upbeat for a week or two and then they badmouth Apple again. It would be almost be better if they were manipulating the stock for their benefit than if they're just simply wrong, because at least there's some rationality to the manipulation. If they're not manipulating the stock, then they're just plain incompetent.
As I was surfing the dial last night, I saw a TV news report showing long lines at the Apple temporary store on Fifth Avenue (NYC) in the old FAO Schwartz building - all people camping out to try and obtain an iPhone X. While I personally think this is quite silly, it's great for Apple. People see that line and then they want the phone themselves. Sometimes, shortages create demand. Consumers always want what they can't easily have and it makes them feel superior if they can obtain one.
If the Home Pod turns out to be a big success and if the 4K Apple TV picks up steam, Apple is going to have an incredible 2018. That $trillion valuation would be a 13% rise over the current price. I think that's actually doable by the end of 2018, especially if Apple surprises us in 2018 with something new and unexpected.
Bank America Merrill Lynch did not raise their $180 target, which they established back in May. Their analyst Wamsi Mohan raised revenue expectations after yesterday's call and surprise, but not so much the earnings. They only give AAPL a 15x multiple, which they note is high by its historical standards. Due to the range of iPhone's it's tougher to predict margins. Personally, I'm more bullish and believe Apple shouldn't be lumped in with Hewlett Packard as peer. Here is the most bearish excerpt of today's BAML report: "What the bears will fixate on Bears will point to (1) Lack of clarity on supply demand balance for iPhone X, (2) Lower iPhone ASP in the Sep quarter ($618 vs. consensus at $638) bringing into question price elasticity (3) GM guide for F1Q18 (38.25%, mid-point) is lower than consensus of 38.6% (calls into question overall margins for iPhone X), (4) Lack of quantification of pre-orders (5) Reversal of lead times for iPhone X overnight back to three to four weeks. "Where we shake out In our opinion, it is too early to call the demise of the iPhone X despite limited commentary on the earnings call as the first selling date is Nov 3rd. Investors will watch the sell through data and determine if the mix, margin trajectory can support an upside case of $12+ in C18 EPS based on higher ASP and margins. Our estimate of $11.91 assumes solid sell through and a material step up in the ASPs of the iPhone."