Apple Inc. (NASDAQ: AAPL) is trading higher after another impressive earnings report. The biggest company in the world by market cap, and the world’s most profitable company, sold a whopping 48 million iPhone units. This was at or just under street expectations. So why is it that investors and analysts have such confusing views on Apple?
24/7 Wall St. has looked at the realm of analyst calls on Apple and it is nothing short of baffling. This might not matter with any other company nor on any other report. The problem here is that such a mixed reporting of followers is a deviation from the norm when it comes to Apple.
As Apple moves closer to the iPhone 7, one view here is that Apple’s growth may be hitting the pause button. That may sound like heresy to the diehard Apple fanboys, but that endless growth is really all around the iPhone. An Apple TV refresh and an iPad refresh may help, but that Apple Watch, the streaming music, iTunes and iOS “upgrades” have all come with mixed fanfare of late. Oh, and when was the last time anyone was talking up the new iPod or the great Mac sales?
Before we get to the slew of Apple analyst calls here, Apple made $1.96 in earnings per share (EPS) on revenues of $51.5 billion. That was against the Thomson Reuters consensus estimates for EPS of $1.88 and $51.12 billion in revenues. In the same period a year ago, the company reported EPS of $1.42 on revenues of $42.12 billion. For the fiscal year, Apple posted diluted EPS of $9.22 on revenues of $233.72 billion. Gross margin in the quarter totaled 39.9%, up from 38% in the year-ago quarter, and international sales accounted for 62% of all sales.
The reality is that Apple had another very solid quarter. One other concern though may be that one has to wonder about the product that will fire Apple’s next growth spurt. Without that signal of innovation or the next great invented growth frontier, Apple is in danger of not only losing its cachet but its very tidy hardware margins.
Now take a look at an analyst call montage from a dozen or so calls that 24/7 Wall St. has put together on Apple. There is an upgrade, but there are firms raising their price targets and others lowering their price targets. These calls are listed below, with some only as a summary and with some having quotes and formal references. Frankly, Apple’s size and market cap, and where it is in the growth cycle, might merit at least some debate due to this wide of a disparity in the views, particularly in light of Apple’s latest short interest being the second highest short interest of 2015. Another consideration was that Apple shares were weak ahead of earnings due to what solely appeared to be weakness at one Apple chip supplier earnings.
Bank of America Merrill Lynch maintained its Neutral rating and kept its $130 price target. The firm said in its rationale for Apple:
We rate Apple Neutral on risk of : 1) Upcoming deceleration in iPhones after a strong product cycle 2) development of new revenue sources like Apple Pay, Apple Watch, home/health kit etc. that will take time to mature. Offsetting these risks are optionality provided by a significant cash balance that can help accelerate innovation into new markets.