Bullish analysts are advising clients to buy Apple stock ahead of iPhone supercycle. Apple yesterday reported record revenue of $64.7 billion, up about 1% from a year ago and slightly ahead of the Wall Street consensus of $64.2 billion. Profits were 73 cents per share, $0.02 ahead of consensus.
There are multiple factors weighing on the stock. For one, the 21% drop in iPhone sales, while not a big surprise, was a little worse than some analysts had modeled. Two, the 29% drop in Greater China sales was a little shocking and a reflection of the company’s lagging position in 5G phones in a key market. And three, Apple declined to give guidance for the third straight quarter, which really shouldn’t have surprised anyone but seemed to rattle some investors.
Morgan Stanley’s Katy Huberty came away from the call more bullish than ever. “All signs point to a supercycle,” she writes in a research note, repeating her Overweight rating and $136 price target. “We continue to see upside to fiscal 2021 estimates after Apple grew revenue double-digits across all products including iPhone after normalizing for [the iPhone] product cycle. iPhone growth will accelerate further on extended replacement cycles, more new [models] and aggressive subsidies.”
Wedbush analyst Dan Ives likewise is undeterred in his bullish view. “Last night…the Street and the overall market was hoping for blow out results from FAANG tech stalwarts with Apple and Amazon leading the way and ultimately came away disappointed with tech stocks selling off this morning on the news,” he writes. “Taking a step back, we believe Apple is on the cusp of its largest iPhone product cycle since iPhone 6 in 2014 and we would be buyers on any weakness.” He keeps his Outperform rating and $150 target.
MacDailyNews Take: Vroom, vroom!