Apple Inc.’s results were praised for a quarter which had “no blemishes,” according to Wedbush, as demand for recently-released iPhone 11 models bodes well for the holiday period. Multiple analysts raised price targets, with a new Street-high from Morgan Stanley implying 22 per cent upside for the tech giant.
Analysts were also positive on the performance of Apple’s services business and sales of wearable technology. Looking further ahead, the potential release of a low-cost SE2 iPhone model as well as 5G-enabled devices may provide a further boost.
The stock gained as much as 2.2 per cent and returned near record levels hit earlier this week. The stock has rallied more than 40 per cent from a low in early June.
Here’s what analysts are saying about Apple’s results:
Goldman Sachs (Rod Hall)
The outlook was “solid,” but “not as strong as we believe some more bullish investors might have expected.”
This was “a positive report,” but the stock is “discounting a strong product cycle at the end of 2020 before 2019 is over.”
Price target raised to US$188 from US$165. Neutral rating.
Wells Fargo Securities (Aaron Rakers)
Demand for the iPhone “met increasing expectations” and provided “confidence” ahead of the 5G iPhone cycle next year.
Price target raised to US$245 from US$215. Market-perform rating.
Morgan Stanley (Katy Huberty)
4Q results were “clean across the board,” with a strong iPhone 11 cycle and services growth acceleration which should continue.
Apple has a clear catalyst path as it is converting its significant R&D investment to introduce innovation across its products and services, as well as making its products more affordable though pricing, trade-in and financing offers.
Apple remains overweight and top pick for 2020; raises PT to US$296 from US$289. Morgan Stanley’s PT boost comes less than two weeks after the broker previously boosted its target to a Street-high.
Cowen (Krish Sankar)
Apple’s fourth-quarter results and outlook were better than expected, thanks to upside from iPhone and services.
IPhone strength is a positive for sentiment, while services business continues to grow at a robust rate. As the new iPhone 11 product family is being received well, this could drive a re-rating in the shares, especially as a potential low-cost SE2 model and a 5G iPhone could be additional catalysts.
Reiterates outperform rating, raises PT to US$290 from $250.
Wedbush (Dan Ives)
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There were no blemishes in the quarter. Overall this quarter and guidance is a major feather in the cap for the bulls that should drive the stock higher over the coming months.
Regarding iPhones, importantly China came in well above both Wedbush’s and the Street’s expectations and is on the path to showing growth in the region which remains the focus of investors.
Reiterates outperform rating, PT US$265.
Piper Jaffray (Michael Olson)
Upside in the quarter was driven by sales of iPhones, wearables and services, while Apple’s revenue guidance for the December quarter is 1 per cent ahead of consensus at the mid-point.
Looking ahead to full-year 2020, Apple is in the middle of a perfect storm, with the current iPhone performing at-or-above plan, non-iPhone, especially wearables and services, trending better-than-expected and growing anticipation for 5G iPhones that will be coming late in the fiscal year.
Reiterates overweight, raises PT to US$270 from US$243.
Raymond James (Chris Caso)
Apple’s results confirm what Raymond James learned in Asia last month, that this year’s cycle appears to be beating modest expectations for this year. A combination of lower prices and improvement to battery life and the camera is allowing for modest growth.
Positive thesis remains underpinned by expectation for a two-year upgrade cycle starting next year, which will benefit both units and mix.
Reiterates outperform rating and PT US$280.
KeyBanc Capital Markets (Andy Hargreaves)
IPhone and wearables revenue exceeded estimates, with third-quarter results above expectations. However, overall growth prospects remain modest, as headwinds to iPhone profit growth will offset that in newer categories in coming years.
Apple is fully-valued at current levels. While the company has rapidly expanded its services offering, KeyBanc continues to expect smartphone saturation to constrain Apple’s overall profit growth.
Maintains sector weight rating, PT US$247.
–With assistance from Beth Mellor.