Apple Earnings 'Better-Than-Feared,' Company Can Weather Storm: Why Analysts Remain Bullish

Apple Earnings 'Better-Than-Feared,' Company Can Weather Storm: Why Analysts Remain Bullish

Technology giant Apple Inc AAPL reported quarterly earnings after market close Thursday. Analysts are sizing up a quarter and guidance that may have been “better-than-feared” with updated price targets.

The Apple Analysts: Morgan Stanley analyst Erik Woodring had an Overweight rating and a price target of $180.

Rosenblatt Securities analyst Barton Crockett had a Neutral rating and lowered the price target from $168 to $160.

Raymond James analyst Melissa Fairbanks had an Outperform 2 rating and lowered the price target from $190 to $185.

Needham analyst Laura Martin had a Buy rating and price target of $170.

Related Link: Apple Stock Rallies On Better-Than-Feared Q3 Results: What Investors Need To Know 

The Analyst Takeaways: The ongoing theme from analysts was the report from Apple was “better-than-feared.”

Morgan Stanley's Woodring pointed to the upside from iPhone and Services helped offset weakness from the Mac, iPad and Wearables. The analyst saw guidance going forward as potentially conservative as a result.

“Estimates are largely unchanged and Apple remains our Top Pick with a $180 price target,” Woodring said.

The analyst said macro challenges are present but Apple remains well ahead of its peers.

“While management communicated a more cautious tone around demand for Wearables and digital advertising, they are not yet seeing any macro impact on iPhone results.”

Rosenblatt's Crockett called macro headwinds for Apple “muted” and liked the fact that iPhone is not seeing an impact.

“Apple’s F3Q22 earnings report featured relief that supply chain headwinds and China disruptions eased and were not as bad as feared,” Crockett said. “China amazingly only dipped 1% with a sharp recovery in June after COVID disruptions early in the quarter.”

Crockett called Apple “an excellent company” but thought macro and regulatory headwinds could continue to weigh on earnings.

Crockett reiterated an Outperform rating with a “better-than-feared” report from Apple.

“Despite a number of headwinds including FX, China shutdowns, macroeconomic concerns, and component shortages, AAPL was able to deliver record June quarter revenue,” Raymond James' Fairbanks said.

The analyst cut near-term expectations given uncertainty but sees Apple as a winner.

“AAPL is likely to weather the coming (or current) storm better than others in the consumer devices market.”

Needham's Martin pointed to a strong installed base for iPhones, which hit an all-time high in the quarter and saw a record number of people that switched from Android, which is owned by Alphabet Inc GOOGGOOGL.

The analyst said Apple mentioned the potential to grow through acquisition, but preferred to do "acqui-hires" or buy small technology companies.

“Our channel checks in Washington D.C. lead us to believe that regulators want the FAANGs to be smaller, not larger, and therefore AAPL would NOT get approval to buy a large company such as Disney or Netflix,” Martin said referencing Walt Disney Co DIS and Netflix Inc NFLX.

The analyst saw cash being used for paying down debt. 

AAPL Price Action: Apple shares are up 3.44% to $162.78 on Friday afternoon versus a 52-week range of $129.04 to $182.94.

Photo: Andrey Bayda via Shutterstock


 

Posted In: AndroidBarton CrockettChinaErik WoodringiPadiPhoneLaura MartinMacMelissa FairbanksMorgan StanleyNeedhamRaymond JamesRosenblattTechnology StocksAnalyst ColorPrice TargetReiterationAnalyst RatingsTechTrading Ideas