Following Apple (NASDAQ:)’s latest earnings report, analysts took a look at the stock, highlighting a generally positive outlook. Despite varying degrees of enthusiasm, analysts suggest that the best is yet to come for Apple.
Bernstein Bernstein praised Apple’s fiscal third-quarter performance, noting that the results were “modestly ahead of consensus” with revenue growth of 5% and services expansion of 14%. Bernstein emphasized Apple’s strong free cash flow and restrained capital expenditures, describing Apple’s approach as “capital-light,” mitigating the risk of overinvestment.
Analysts raised their earnings per share estimates for fiscal 2024 and fiscal 2025 and reiterated their belief that concerns about Apple’s China business are overblown, seeing the weakness as cyclical rather than structural. Bernstein expects Apple’s AI function to drive a strong iPhone upgrade cycle, perhaps split between the iPhone 16 and 17 cycles.
Goldman Sachs Goldman Sachs noted the strong performance from iPhones and services. They highlighted that Apple’s channel inventory is at the lower end of its target range, indicating strong demand. Goldman is bullish on the iPhone replacement cycle over several years, supported by strong service margins.
Analysts have pointed out that Apple’s gross profit margin guidance for the fourth quarter could represent a record for the third quarter of 2016, which enhances the possibility of continued strong performance.
Piper Sandler We noted that Apple’s Q2 2011 results slightly beat expectations, driven by growth in iPad and services sales. Despite a year-over-year decline in iPhone revenue, the installed base reached new record levels.
Piper Sandler remains cautious about the consumer market in the second half of the year, but acknowledged management’s enthusiasm for Apple Intelligence. It maintained a neutral rating and a $225 price target, citing the current valuation as favorable.
Wells Fargo Apple considered its earnings forecast to be “good enough,” suggesting it may be conservative. They also remained optimistic about the potential for a strong iPhone 16 upgrade cycle, supported by long-standing low upgrade rates and growing consumer familiarity with generative AI.
Wells Fargo also highlighted the improvement in performance in China and reiterated its overweight rating with a $275 price target.
American bank They expressed their belief that “the best is yet to come” for Apple, emphasizing the potential for a multi-year iPhone upgrade cycle driven by Apple’s intelligence. They pointed to improving trends across Apple’s portfolio and regions, with services reporting record revenue.
Bank of America sees potential for higher iPhone units, higher average selling prices, and higher gross margins, reiterating a Buy rating with a $256 price target.
Overall, analysts agree that despite some near-term challenges, Apple’s strong fundamentals and strategic position in AI and services pave the way for continued growth and potential stock appreciation.
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