FBR Calls Apple's Quarter 'Picasso-Like'

In a report published Tuesday, FBR Capital Markets analysts maintained an Outperform rating on Apple Inc. AAPL, with a price target of $185, after the company reported robust F2Q15 results.

Apple reported solid quarterly results, beating Street expectations at both the top line and bottom line, driven by another strong iPhone performance.

The company reported total revenue at $58.0 billion, representing 27 percent y/y growth, with accelerating y/y revenue growth in China. iPhone revenue came in at $40.3 billion, with 55 percent y/y growth, and handsomely beating the Street’s estimate of $36.8 billion. At 61 million, iPhone unit shipments were above the Street’s estimate of 56 million.

Gross margin stood at 40.8 percent, as compared to 39.9 percent in the prior quarter and 39.3 percent in the year-ago period. Backed by its stronger-than-expected top-line and margin performance, the company reported its EPS at $2.33, ahead of the Street's $2.15 estimate.

In the report FBR Capital Markets noted, "Coupled with a good F3Q15 (June) outlook, Apple announced a massive expansion (we believe better than Street expectations) to its capital return program, a solid "one-two punch" that Apple bulls were hoping for, in our view, as the white hot iPhone 6 product cycle continues to help boost the company's coffers (along with a debt raise in F2Q) and should enable enhancing shareholder value strategies."

Regarding Apple Watch, the analysts said, "…we continue to believe strong early interest in the device will have positive implications for Apple over the coming quarters/years, and we continue to view the launch of the Apple Watch as a major potential door opener for wearable technology across the board as this next paradigm shift is likely set to take place across the consumer/ enterprise landscape."

• The total revenue and EPS estimates for F3Q15 (June) have been raised from $47.1 billion and to $47.8 billion and from $1.70 to $1.72, respectively, to reflect the stronger-than-expected uptake of the latest iPhone product cycle.
• The total revenue and EPS estimates for FY15 have been raised from $227.4 billion to $230.3 billion and from $8.71 to $8.93, respectively, to reflect higher iPhone assumptions and F2Q15 results.
• The total revenue and EPS estimates for FY16 have been raised from $241.2 billion to $247.1 billion and from $9.46 to $9.58, respectively.