Apple stock pulled back a bit on Thursday following Wednesday’s rally driven by investors buying the weakness in the name. The company’s March quarter results weren’t the home investors have come to expect, but analysts are still trying to convince them that the iPhone 8 will make everything OK. After all, Apple CEO Tim Cook even said on the conference call that rumors about the extra-phenomenal iPhone model expected this year caused people to hold off on buying a new iPhone during the March quarter.

apple stock iphone 8
Photo by kropekk_pl (Pixabay)

What if all the iPhone 8 hype is nothing but hot air?

Multiple firms updated their views on Apple stock following this week’s print, and unsurprisingly, the consensus view is still Buy despite the mixed results. Of the ten or so Apple stock reports we’ve reviewed since the earnings release, only two had a Hold rating or equivalent on it. One of the two is Deutsche Bank, which cited ValueWalk in one of its earnings preview notes last week.

We reported that sources at Foxconn hinted that the iPhone 8 may not come out this year after all. It’s still very early of course, but what we heard late last month isn’t much of a stretch. You may remember that Japanese-language blog Macotakara reported in March that the iPhone 8 could be delayed. At that time, however, the rumor still suggested a launch in time for the 2017 holiday shopping season. Now we’re a couple of months later, so Apple’s suppliers must have a better idea of launch timing for the iPhone that will do everything but make you breakfast in bed (supposedly).

Of course lots of things could happen, so even if a delay is currently expected, that might not end up being what happens.

Apple stock rated at Hold

At any rate, Deutsche Bank analyst Sherri Scribner reiterated her Hold rating on Apple stock but bumped her price target up from $125 to $130 per share because the multiple has moved higher. She summed up what most analysts had to say about the print: “not that bad, but not that great either.” However, she also expects the bull case to win in the near term.

She was disappointed with the number of iPhones Apple sold during the March quarter, although she found Mac sales to be a bright area as they grew 14% year over year with strong increases in average selling prices. The gross margin also ended up being toward the high end of the company’s outlook despite higher costs for components and currency headwinds.

However, Scribner was concerned about trends in Greater China, which continued to sag as sales there fell 14% year over year. She also described the 8-cent per-share earnings beat as “generally of low quality” because 6 cents per share of it came from higher “other” income and a lower tax rate than what management had been expecting.

The other firm that has Apple stock rated at Hold is Stifel, which has a $150 price target it on it. Stifel analyst Aaron Rakers also highlighted Chinas as an area of concern. Scribner is concerned about consumers in emerging markets being able to afford expensive iPhones, although Rakers noted that China has a greater mix of the more expensive Plus-sized iPhones.

Apple stock heading to $190?

Of course the consensus view on Apple stock is overtly bullish, as Morgan Stanley analyst Katy Huberty sees an “increasing likelihood” of the iPhone maker meeting her $190 per share bull case which is based on “new technologies down the iPhone portfolio and extending the upgrade cycle into FY19 as well as increasing high margin services mix and potential tax reform/cash repatriation.”

Huberty also noted that Apple’s June quarter gross margin guide was better than she had been expecting. In her view, this “suggests the company is offsetting higher memory prices with price cuts on other components as well as rising services mix.” She remains convinced that the iPhone 8 will enable Apple to benefit from the “growing base of aged iPhones and exciting new technology, including OLED displays, 3D sensors and wireless/fast charging tech.”

About that gross margin…

Bank of America Merrill Lynch analyst Wamsi Mohan believes that Apple might be accruing Qualcomm royalties at a lower rate than it has historically, which of course would stem from the feud currently going on between them. The analyst estimates a sequential tailwind of about 100 basis points.

But one thing that should be noted is that when Apple introduces new form factors for the iPhone, the gross margin takes a hit, so theoretically, if there will be a phenomenally different iPhone 8 this year, one would think the gross margin wouldn’t look very good in the coming months… unless, of course, the company is indeed planning to charge $1,000 or more for it. And then there’s always the possibility that the iPhone 8 won’t make an appearance this year. Anything can happen in the next four or five months.

Shares of Apple stock declined by as much as 0.48% to $146.35 during regular trading hours on Thursday.