Shares of Apple gained as much as 8.48% in premarket trading this morning, climbing as high as $118.40 per share after last night’s exceptional earnings report
Apple stock is now approaching its all-time split adjusted high of $119 per share and looks poised to beat it at some point today. As a result of last night’s earnings report, analysts from several firms have upgraded Apple stock or increased their price targets for the company.
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Cantor Fitzgerald ups Apple price target
One analyst who increased his price target for Apple is long-time bull Brian White of Cantor Fitzgerald. He bumped his price target up from $143 to $160 per share. He maintained his Buy rating.
Apple posted sales of $74.6 billion, easily beating White’s estimate of $68.2 billion. Pro forma earnings per share were $3.06, again beating his estimate of $2.61 per share. The company also smashed its own guidance, which was for between $63.5 billion and $66.5 billion, which implied earnings of about $2.42 per share at the midpoint.
Apple’s gross margin also beat estimates, coming in at 39.9%, compared to White’s estimate of 38.6%. The company’s operating margin was 32.5%, also ahead of his estimate of 30.4%. The analyst called the December quarter a “truly amazing iPhone quarter,” as the company sold 74.5 million iPhones, which was far better than his estimate of 67 million. Even iPad units were higher than his estimate, coming in at 21.4 million, compared to his estimate of 21 million. However, Apple missed his Mac estimate, posting 5.52 million units compared to his estimate of 5.74 million.
Guidance for the current quarter was also strong, coming in at between $52 billion and $55 billion, compared to his estimate of $53.7 billion. Apple expects a gross margin of between 38.5% and 39.5%, compared to White’s estimate of 38.1%. The company’s implied earnings per share are around $1.99, also ahead of his estimate of $1.97 per share. Because Apple management tends to be conservative in their estimates, White said these guidance numbers are quite strong.
Barclays raises Apple price target to $150
Barclays analysts Ben Reitzes and Ryan Jones also bumped up their price target for Apple, pushing it from $140 to $150 per share after last night’s earnings report. They maintained their Overweight rating on the stock.
The Barclays team said they were impressed with Apple’s gross margin performance, especially because of the currency exchange issues. They think the momentum of the iPhone could continue into the company’s upcoming product launches. The Apple Watch is scheduled for an April release, which is great timing because usually that quarter is pretty quiet for the company. The Barclays team thinks the smartwatch will end up being a catalyst going into this year’s holiday season. In the near term, they say Apple’s increased cash returns provide a catalyst for April.
Other analyst updates for Apple
Susquehanna analysts also increased their price target for Apple from $130 to $140 per share.
One firm that did not bump up its price target for Apple was Stifel, which kept it at $130 per share and maintained its Buy rating. In addition to the same things noted by most other firms, Stifel analyst Aaron Rakers and his team noted that the reported average selling price of the iPhone came in at $687, beating their estimate of $680 and coming out significantly ahead of Wall Street’s estimate of $662.