Technology

Why Analysts Are Cheering Apple Even Higher After Q4 Earnings

Chris Lange

Published: October 31, 2019 3:32 pm

Last Updated: January 30, 2020 1:42 pm

Apple Inc. (NASDAQ: AAPL) released its most recent quarterly results after markets closed Tuesday. Apple closed out this fiscal year with its stock hitting an all-time high on the back of strong fourth quarter results. Analysts cheered on these results and hiked their targets across the board.

24/7 Wall St. has included some brief highlights from the report as well as what analysts are saying after the fact.

The iPhone giant said that it had $3.03 in earnings per share (EPS) and $64 billion in revenue, compared with consensus estimates that called for $2.84 in EPS and $62.99 billion in revenue. The fourth fiscal quarter from last year had $2.91 in EPS and $62.9 billion in revenue.

Note that in this quarter International sales accounted for roughly 60% of the quarter’s revenue.

For the fiscal fourth quarter, the firm reported its product sales as follows:

• iPhone pulled in revenues of $33.36 billion, a decrease of 9.2% year over year.
• Mac revenues decreased by 4.8% to $6.99 billion.
• iPad revenues increased 16.9% to $4.66 billion.
• Services revenues increased by 18.0% to $12.51 billion.
• Other Products revenues increased by 54.4% to $6.52 billion.

Regarding guidance for the fiscal first quarter, the company expects to see revenues in the range of $85.5 billion to $89.5 billion and a gross margin of 37.5% to 38.5%. The consensus estimates call for $4.45 in EPS on $86.92 billion in revenue for the coming quarter.

Wedbush reiterated an Outperform rating with a $265 price target. The boutique investment firm detailed in its report:

Importantly on the iPhone front, China came in well above our and Street expectations and is on the path to showing growth in the region which remains the focus of investors with this key region representing roughly 20% of all iPhone upgrades over the next 12 to 18 months. The highlight of this release and focus of investors in our opinion will be the robust December guidance for total revenue of between $85.5 billion and $89.5 billion vs. the Street’s $86.7 billion estimate. The company is guiding to relative strength in the December quarter on the heels of a trifecta of new iPhone 11s that were released in early September and pent-up demand within the installed base which remains key to our Cupertino bull thesis over the coming year. There were no blemishes in the quarter with Cook & Co. delivering a masterpiece quarter despite its back against the wall with the company the poster child of the US/China trade battle. Overall we would characterize this quarter/guidance as a major feather in the cap for the bulls that should drive the stock higher over the coming months.

A few other analysts weighed in on Apple:

• Wells Fargo reiterated its Market Perform rating but raised its target to $245 from $215.
• UBS reiterated its Buy rating and raised its target to $280 from $275.
• Morgan Stanley reiterated its Overweight rating and raised its target to $296 from $289.
• D.A. Davidson reiterated its Buy rating and raised its target to $300 from $270.
• Cowen reiterated an Outperform rating and raised its price target to $290 from $250.
• Canaccord Genuity reiterated a Buy rating and raised its price target to $275 from $260.
• Barclays reiterated an Equal Weight rating and raised its price target to $236 from $224.
• Piper Jaffray reiterated an Overweight rating and raised its price target to $270 from $243.
• Jefferies reiterated a Buy rating and raised its price target to $285 from $250.
• Merrill Lynch reiterated a Buy rating and raised its price objective to $260 from $250.

Shares of Apple were last seen up about 2% at $248.53, with a 52-week range of $142.00 to $249.75. The consensus analyst price target is $236.55.