Apple CEO Tim Cook.Justin Sullivan/Getty Images
Analysts are largely bullish on Apple's prospects after it reported better-than-expected results in its third-quarter earnings on Tuesday â sending the company's stock to record highs.
Apple beat Wall Street's expectations on both revenue and earnings per share, sending its stock jumping more than 5%, and also issued strong revenue guidance for the next quarter â hinting at the launch of an eagerly awaited redesigned iPhone in September.
Apple's stock is currently sitting around the $150-mark.
In a research note, analysts for Macquarie wrote that its call "was one of its most bullish in recent memory," and touted augmented reality (AR) as a potential growth area: "We expect that in addition to being a key marketing and functional driver of iPhone hardware, AR is going to be directly monetized via the App Store ... we think AR will have some important near- term and many significant long-term implications for Apple and others."
William Blair, meanwhile, said it "remain[s] bullish on the iPhone segment due to a combination of positive demand trends in emerging markets ... a weak competitive landscape in the smartphone space... and the company taking an aggressive approach to enabling the device for next-generation applications."
Not everyone was so positive though, with Barclay's analysts warning that "pre-launch fervor [for the iPhone 8] could get frothy," and that they remained "skeptical."
Business Insider has rounded up a load of analysts' reactions to Apple's Q3 results, and you can read them all below. But first, here are all the key numbers, via Business Insider's Kif Leswing:
Q3 EPS (GAAP): $1.67, up 17% year-over-year, vs expectations of $1.57Q3 revenue: $45.4 billion, up 7% year-over-year, vs expectations of $44.95 billionGross margin: 38.5%, up 1% year-over-year, vs expectations of 38.2%iPhone unit sales:41.0 million, up 1% year-over-year, vs expectations of 41.1 millioniPad unit sales: 11.42 million, up 14% year-over-yearMac unit sales: 4.292 million, flat year-over-yearQ4 revenue guidance: $49 billion - $52 billion vs expectations of $49.21 billion
Macquarie: BULLISH
Rating: Outperform
Price target: $180
Comment: "We thought AAPL's 3Q call was one of its most bullish in recent memory. Despite a coming big refresh, iPhone posted better than expected growth, and virtually all products in almost all geographies posted solid growth. Our focus remains on Services, and while AAPL didn't provide App Store growth, it is clear that Services will remain the key number-two driver behind iPhone for the foreseeable future. We also think it is important to note AAPL and Tim Cook's clear excitement about the potential for AR. We expect that in addition to being a key marketing and functional driver of iPhone hardware, AR is going to be directly monetized via the App Store. As Cook stated on the call, we "couldn't be more excited about AR", and despite our WAY too early call on VR, we think AR will have some important near- term and many significant long-term implications for Apple and others."
William Blair: BULLISH
Rating: Outperform
Price target: n/a
Comment: "On the iPhone front, while the results were marginally below Street expectations on revenue, we believe the upcoming product cycle refresh should be a positive catalyst to the stock. Furthermore, on a longer-term basis, we remain bullish on the iPhone segment due to a combination of positive demand trends in emerging markets (both China and India), a weak competitive landscape in the smartphone space (with Samsung, the only high-end alternative, witnessing structural challenges), and the company taking an aggressive approach to enabling the device for next-generation applications (such as AR)."
Barclays: NEUTRAL
Rating: Equal Weight
Price target: $146 (previously $123)
Comment: "Pre-launch fervor could get frothy ... Yes, thatâs right; iPhone is just trudging along before the next launch. The Sep-Q outlook came in better than expected, which could fuel the Bullsâ exuberance that the next iPhone launch could rival the iPhone 6 (IP6) mega-growth cycle. We are somewhat skeptical, though, as Jun-Q results reveal other drivers beyond the iPhone for the incremental goodness. iPhone ASP trends are hardly improving despite what the company referred to as strong IP7 Plus mix. Further, the broader market push to the midrange in smartphones and increasing competitive intensity in China could become bigger long- term headwinds.
Deutsche Bank: NEUTRAL
Rating: Hold
Price target: $140
Comment: "Apple delivered upside to results and guidance in a quarter that most investors weren't particularly focused on. The big upside surprise came from iPad sales, while Services also saw improving trends. The focus for investors, however, is the next iPhone launch, with mgmt's guidance implying a relatively normal sequential increase, which may suggest speculation about iPhone delays are unfounded. We felt mgmt delivered a good quarter, but we continue to believe the market is overly optimistic on future iPhone sales. Given a saturated smartphone market, elongating refresh cycles, increased competition in China, and a growing secondary market, we think Apple will have a hard time delivering on Street expectations. We continue to view Apple as a trading stock, and believe shares will trade at the higher end of their historical range while current market multiples are elevated."
