Apple Inc. (AAPL) Future Prospects Are Brighter: Cantor

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Cantor Fitzgerald analysts Brian White and Isabel Zhu said the future prospects of Apple “have never been better” after delivering its financial results for the third quarter.

White and Zhu noted that Apple’s Inc. (NASDAQ:AAPL) earnings and sales increased 45% and 35%, respectively during the quarter. Its earnings of $1.85 per share beat their expectation of $1.82 per share and the Street estimate of $1.80 per share.. Its sales of $49.61 billion were slightly below their revised expectation of $49.84 billion, but higher than the Street estimate of $49.25 billion.

The analysts pointed out that Apple Inc. (NASDAQ:AAPL) is still in the middle of transformational, super cycle with the Apple Watch, its new product category in five years. The tech giant is also in a multi-year iPhone cycle, a big momentum in China and a rapidly expanding innovation.

According to White and Zhu, they see long-term innovation opportunities for Apple in the TV, personal robots markets and the highly speculated Apple Car.

“We believe Apple is innovating like never before and ultimately we expect this will better diversify the company’s portfolio and open up a new avenue of growth,” according to White and Zhu.

Analysts’ stock rating, PT, and EPS estimates for AAPL

The analysts raised their earnings estimate for Apple Inc. (NASDAQ:AAPL) and reiterated their Buy rating and 12-month price target of $195 per share.

For the fourth quarter, White and Zhu increased their earnings estimate for Apple to $1.89 from $1.82 per share. The analyst also increased their revenue estimate to $52.79 billion from $53.46 billion.

The analysts also raised their earnings estimate for the FY16 to $10.05 from $9.82 per share.

Apple Watch will be the “go to” gift this holiday season

White and Zhu believed that the Apple Watch will become the “go to” gift this holiday season, and it will become the best-selling product in the history of Apple Inc. (NASDAQ:AAPL).

They noted that the Apple Watch is now available in 19 countries, and Apple Inc. (NASDAQ:AAPL) plans to roll out the device in three more countries bu the end of this month. White and Zhu believed that the first version of the Apple Watch would be available in more than 100 countries, similar to the iPhone.

White and Zhu said the iPhone’s momentum in the third quarter was stronger than the previous quarters. According to them, iPhone’s momentum was driven by the iPhone 6 and iPhone 6 Plus. They also noted that Apple generated strong sales in emerging markets and some developed countries. Apple’s iPhone unit sales were more than doubled in Germany, Korea, Malaysia, and Vietnam. Its iPhone sales also increased significantly in Greater China and India, respectively.

“Although we believe further weakness in China’s stock market could take away some of the “bling” purchases of iPhones, we do not believe this will change the positive momentum for Apple — the company’s business in Greater China sizzled in 3Q FY15,” said White and Zhu.

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