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Wall Street On Apple: Every Rose Has Its Thorn

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Wall Street On Apple: Every Rose Has Its Thorn
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Apple Inc. (NASDAQ: AAPL) released its highly anticipated Q3 earnings report after the market close on Tuesday.

The tech giant posted beats on both revenue and EPS. Company executives reported revenues of $49.6 billion compared to a forecasted $48.6 billion; EPS of $1.85 versus expectations of $1.76. Nevertheless, the stock tanked by almost 10 percent after hours as iPhone sales came in softer than anticipated and a weaker guidance.

Despite the Street's generally positive take on Apple following earnings, the stock was down 5 percent at $124.25 on Wednesday morning.

Credit Suisse

In a report published Wednesday, analyst Kulbinder Garcha reiterated an Outperform rating and $145 price target on Apple, but lowered his EPS estimate slightly. "Given high retention rates, a superior ecosystem, and multi-product compute advantage," he believes that solid earnings and free cash flow should be sustainable long-term.

Although iPhone numbers missed his own predictions, Garcha said it was still in line with the Street and maintained that "signs for growth [still] exist" on that front.

Related Link: Apple Sells A Record-Breaking 47.5 Million iPhones, But Is Wall Street Underwhelmed?

Cowen and Company

In a report published Wednesday jokinlgy titled "Every Rose Has Its Thorn", analyst Timothy Arcuri downgraded Apple to Market Perform and lowered his price target from $140 to $130. He cited "a tepid iPhone number and mounting China demand concerns" as primary concerns. He also said that Cowen's own field research indicated that "new iPhone builds are down cycle/cycle for the first time."

FBR & Co.

In a report released Wednesday, FBR analyst Daniel Ives reiterated an Outperform rating on Apple but adjusted his price target down to $175. "As Apple has become the "gold standard" of technology, it is held to a higher standard," he explained, which is why investors were disappointed by "good but not great" sales numbers.

According to Ives, the "China growth story [is] still well intact" with more than 100 percent growth. Meanwhile, he saw a lack of transparency regarding Apple Watch sales worrisome.

Goldman Sachs

In a report published Tuesday, Goldman analyst Bill Shope reiterated a Buy rating and $163 price target on Apple. He said it was a "slightly better-than-expected quarter relative to [his] estimates and consensus." Shope maintained that the iPhone 6 and 6 Plus performed well for the tail end of their product cycle. He expects focus to soon shift toward the iPhone 6s refresh this fall.
Piper Jaffray

In a report published Tuesday, Piper Jaffray's Gene Munster maintained and Overweight rating on Apple and a $172 price target. He anticipates that the company "will continue to gain share in the high-end smartphone market and margins will expand into the S cycle." He also noted that the iPhone sales that some found disappointing still represented substantial market share gains.

Munster suggested that investors shouldn't be too concerned about Apple's Chinese market in wake of the country's stock market crash.

Pacific Crest Securities

In a note published Tuesday, analyst Andy Hargreaves gave Apple a Sector Weight rating without offering a price target. He described the firm's risk/reward profile as "slightly positive," saying that the stickiness of the iPhone user base would likely limit the downside. Nevertheless, Hargreaves doesn't see many near-term catalysts for Apple's stock.

Raymond James

In a report published Wednesday, Raymond James' Tavis McCourt labeled Apple a Market Perform. He noted that the slightly weak iPhone sales were offset by a $100 boost in average selling price for Apple's devices over the quarter.

"It is hard to call anything bad or ugly this quarter, but coming off some truly exceptional quarters in December and March, June was clearly less ebullient."

Jefferies

Analyst Sundeep Bajikar advised investors to hold Apple and gave the company a $135 price target. According to Bajikar, Apple is trying to "accelerate its transition from a tech brand to a hybrid tech-luxury-fashion brand," which he said could require additional product categorization and changes to retail and merchandising.

He also believes Apple's foothold in China should remain firm despite competition from lower-priced Android devices manufactured by Xiaomi and Huawei. Jefferies' on-the-ground checks indicate that Apple's "superior brand image" has kept consumers loyal.

Latest Ratings for AAPL

DateFirmActionFromTo
Mar 2017NeedhamDowngradesStrong BuyBuy
Mar 2017NomuraMaintainsBuy
Mar 2017BernsteinMaintainsOutperformOutperform

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

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