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Key To Apple May Be That Target Markets Aren't Saturated, Analyst Says

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In a report published Tuesday, JMP Securities analysts maintained a Market Outperform rating on Apple Inc. (NASDAQ: AAPL), with a price target of $150, after the company reported solid F2Q15 results.

Apple reported its F2Q15 EPS at $2.33, ahead of the JMP Securities estimate of $2.20 and the Street estimate of $2.15. The beat was driven by better-than-expected revenue of $58B and gross margins of 40.8 percent.

All key metrics were ahead of the guided range and consensus expectations. iPhone unit volumes climbed 40 percent y/y to 62M, versus consensus of 57M.

Apple's share price rose more than 1 percent in response to the results. The analysts believe the results reflect "a clean and confidence inspiring quarter in every regard."

Related Link: Apple Earnings Live Blog: Q2 Conference Call

The analysts commented, "… we continue to recommend aggressively buying the stock while it remains at an attractive discount to the S&P 500 mean market multiple despite demonstrating best-in-class performance in an environment where many other Tech bellwethers are missing owing to exchange rate headwinds, emerging market challenges, and/or questionable value propositions."

In the report JMP Securities noted other positives for Apple as:

  1. The company's target markets are "far from saturated." iPhone's penetration into cellular is still less than 20 percent, Mac's penetration into computing is below 10 percent and Apple Pay, Swift, HomeKit, and HealthKit have less than 1 percent penetration into a significant Internet-of-Things opportunity.
  2. Larger percentages of Apple's revenue streams "are entrenching and becoming recurring as Apple Pay and its Enterprise initiatives progress."
  3. Apple's sales growth in Greater China accelerated to 81 percent y/y from 70 percent in the prior quarter.

Latest Ratings for AAPL

Oct 2016Goldman SachsMaintainsBuy
Oct 2016Credit SuisseMaintainsOutperform
Oct 2016PiperJaffrayMaintainsOverweight

View More Analyst Ratings for AAPL
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Posted-In: JMP SecuritiesAnalyst Color Reiteration Analyst Ratings


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