Consumer Products

How High Analysts Are Chasing Apple's Price Targets

Apple Inc. (NASDAQ: AAPL) reported its most recent quarterly earnings and absolutely blew investors and analysts away. The stock generated a return of 12.5% in 2016, but currently 2017 is shaping up to be even greater, if everything continues as is. Ultimately, earnings propped up the stock for Wednesday’s rally, but as more analysts continue to weigh in the stock it could run even more.

When 2017 kicked off, Apple had a consensus analyst price target of $131.96. Although this has only lurched forward to $133.54 currently, more analysts will be pushing the consensus higher over the course of the next few days. It’s worth noting that the consensus target was $131.00 just 60 days ago and $130.75 right before the election.

24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts are saying about this record quarter after the fact.

In its recent earnings report, the iPhone giant posted $3.36 in earnings per share (EPS) and $78.4 billion in revenue, versus consensus estimates from Thomson Reuters that called for $3.22 in EPS and revenue of $77.38 billion. The same period of last year reportedly had EPS of $3.28 and $75.87 billion in revenue.

In terms of guidance for the fiscal second quarter, the company is calling for revenues in the range of $51.5 billion to $53.5 billion with a gross margin between 38% and 39%. The consensus estimates are $2.09 in EPS and $53.94 billion in revenue for the coming quarter.

Its business segments reported:

  • The iPhone segment shipped a total of 78.29 million units for total revenue of $54.38 billion, an increase of 5% in units and 5% in revenue year over year.
  • iPad shipped 13.08 million units for $5.53 billion in revenue, a decrease of 19% in units and a decrease of 22% in revenue from the same period last year.
  • The Mac segment shipped 5.37 million units for a total of $7.24 billion in revenue, with units rising by 1% and revenue rising by 7%.
  • Services revenues rose 18% year over year to a total of $7.17 billion in revenue.
  • Other Products had revenues that totaled $4.02 billion, which was down 8% from last year.

Credit Suisse headed up the analyst calls, reiterating an Outperform rating with a $150 price target. The firm detailed in its report:

With the iPhone returning to growth and Services again showing stellar growth (with management expecting Services revenue to double in 4 years), we believe our thesis is intact. Given the Services growth and an installed base that could reach about 1.4 billion LT, we see sustainable free cash flow of $67 billion LT with a valuation of $150.

Merrill Lynch has a Buy rating with a $140 price objective. The firm said that iPhone units came in strong in the December quarter (78 million) but iPad was significantly weaker on supply constraint (component shortage). One of the goals is to double services revenue in four years, which would help margins, a catalyst being that the December quarter saw strong growth in services revenue.

A few other analysts weighed in on Apple as well:

  • Barclays has an Equal Weight rating and raised its price target to $123 from $117.
  • Canaccord Genuity has a Buy rating and raised the price target to $142 from $140.
  • Deutsche Bank has a Hold rating and raised the price target from $108 to $115.
  • Mizuho has a Buy rating and raised its price target to $135 from $130.
  • Morgan Stanley has an Overweight rating and raised its target to $150 from $148.
  • Pacific Crest has an Overweight rating and raised its price target to $140 from $127.
  • RBC has an Outperform rating and raised the price target from $125 to $140.

Shares of Apple were last seen up more than 5% to $128.23, with a consensus analyst price target of $133.54 and a 52-week trading range of $89.47 to $128.00.