Apple Inc. (NASDAQ:AAPL) has received a big upgrade from analysts at Barclays ahead of this month’s earnings report. The firm upgraded the company from Equal Weight to Overweight and has increased its price target from $95 to $110 per share. The Barclays team joins a growing list of analysts who are upgrading and / or raising price targets for Apple ahead of next week’s earnings report.
More optimistic about Apple’s strategy
In his report this week, analyst Ben Reitzes and his team said they have recently become more optimistic on Apple’s strategy. They think CEO Tim Cook has gotten back the confidence of the company’s shareholders in a number of different ways. As a result, they said several of the warning signs they noted earlier in the year have been reversed.
In addition, Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) has posted some weakness recently, and they think this “creates a large unforeseen buffer.” They think Samsung’s problems could make it possible for Apple to gain back share in the smartphone market, not only now but also possibly into the long term.
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iPhone demand
Also the Barclays team said their checks around Apple’s new products going into next year are “so strong,” that they feel “compelled to get on board even if its [sic] midway through the rebound trade.” They report that global demand for iPhones looks to be ahead of their previous projects and isn’t just propping up Apple’s earnings in the near term but also showing a “greater brand appeal internationally” heading into the next iPhone launch.
Reitzes and the team at Barclays compared Apple of this year to Google in terms of a stock analogy and said they “acknowledge the market wants and needs to own this bellwether into the end of CY14 and 1H15.”
Raising Apple estimates
The Barclays team raised their June quarter estimate for Apple to earnings of $1.24 per share on $38.3 billion in revenue. That’s compared to revenue of $37.85 billion and $1.22 per share in earnings in the same quarter a year ago. He predicts that Apple sold 37 million iPhones during the quarter, an increase from his previous estimate of 35 million units. Apple is scheduled to release its next earnings report on July 22.
The analysts increased their earnings per share estimate for this year to $6.36 per share, reflecting 7% growth in revenue, which they are estimating at $183.4 billion for the year. For 2015, they’re estimating $7.10 per share in earnings and 13% growth in revenue, bringing it to $207.2 billion. Their 2016 estimate is $7.63 per share in earnings with 4% revenue growth, bringing it up to $215.89 billion for the year.
