Apple Q2 Earnings: Analysts’ Rap (Also Wrap)

Apple Q2 Earnings: Analysts’ Rap (Also Wrap)

Apple killed it in last night’s earnings report, initially sending shares soaring, but the results weren’t good enough to hold the after-hours level of more than $134 per share. As of this writing, shares of Apple were down 1.15% at $131.12 per share.

Apple kills earnings estimates

Apple beat estimates and guidance last night with earnings per share of $2.33 and revenue of $56.7 billion for the March quarter. The company had guided for revenue of between $52 billion and $55 billion, and consensus estimates suggested earnings of $2.15 per share and sales of $55.9 billion. Apple also beat estimates and guidance for gross margin, coming in at 40.8%, compared to the estimates of 39.4% and Apple’s guidance of between 38.5% and 39.5%.

The company sold 61.2 million iPhones, surpassing Cantor Fitzgerald’s estimate of 58 million. Apple came up on iPads, however, selling 12.6 million units compared to Cantor Fitzgerald’s estimate of 14 million. The company also beat on Mac sales, moving 4.6 million units compared to the firm’s estimate of 4.3 million Macs.

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Apple even guided for June quarter results to be better than Wall Street was previously estimating. Management guided for revenue of between $46 billion and $48 billion, compared to the consensus estimate of $46.9 billion.

Cantor Fitzgerald ups Apple target

Arguably Apple’s biggest bull, Cantor Fitzgerald raised his already Street-high price target of $180 to $195 per share after last night’s earnings report. That would slap a valuation of $1.2 trillion on the company. He expects Apple to hit that level within the next 12 months, which would be quite a move from the current valuation of $772 billion, reports CNBC.

White expects the iPhone maker to report earnings of about $1.65 per share for the June quarter. He noted that the iPhone 6 upgrade cycle is especially strong. That fact, combined with the increase in the capital return plan to $200 billion through 2017 and the new product category with the Apple Watch, the analyst continues to think Apple is “early in this transformational cycle.”

Gene Munster on Apple

Piper Jaffray analyst Gene Munster estimates that for every 1% gain in market share for the iPhone, Apple has to sell 17 million units or up revenue by 5%. Munster said on CNBC’s Squawk Box today that the big question for Apple right now is whether the current growth rate is sustainable.

He thinks it’s possible and that Google will “lose share for the next few quarters. He expects it to only be “a few percentages,” but he gives the advantage to Apple for the next six to nine months. He also pointed out that the iPhone maker has a tremendous advantage in India and is already showing signs of major growth in China.

Apple “crushing it in China”

Stifel analyst Aaron Rakers and his team did not increase their price target for Apple, but they did zoom in on Apple’s progress in China. They maintained their Buy rating and $150 per share price target on the iPhone maker.

Apple reported that iPhone units climbed 70% year over year, compared to the two times increase year over year in the December quarter. They added that expansion in distribution will continue to drive iPhone units in the country. Revenue in Greater China was $16.8 billion or 29% of Apple’s total revenue.

Apple also reported that it sees an active installed base of iPhone 6 or iPhone 6 Plus of about 20% compared to the low teens the company noted at the end of the December quarter.

Other analyst upgrades from Apple

Several other firms also bumped up their price targets after last night’s earnings report. Susquehanna analysts bumped up their price target from $150 to $155 per share. Morgan Stanley analyst Katy Huberty and her team raised their target for Apple from $160 to $166 per share. RBC Capital analysts raised their price target from $140 to $150 per share.

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