Wall Street analysts go all-out bullish on record Apple earnings

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Bullish Apple analysts aren’t panicking about coronavirus…yet
With strong iPhone sales and improvements in China consumer sales, Wall Street analyst can't say enough good things about Apple.
Photo: Brad Gibson/Cult of Mac

Apple’s first-quarter results have triggered confidence among analysts that the future of the company is stronger than ever on the back of the iPhone.

Wall Street analysts began reporting Wednesday their thoughts on the tech giant – everything from strong sales growth in China, to rumors of a new low-cost iPhone to a 5G-ready mobile later this year.

A few analysts are cautious of the potential affects of the coronavirus outbreak on the company after comments by CEO Tim Cook Tuesday that Apple is restricting business travel to China and has closed one Apple Store.

Here’s a rundown on what some of the numbers crunchers are saying:

J.P. Morgan – Samik Chatterjee

Samik Chatterjee was impressed with Apple’s improving sales in China and positive results in iPhone 11 sales.

“The favorable response to the iPhone 11, in combination with success of trade-in and financing programs, have driven a return to growth,” he wrote. “Investors will likely now focus on both wearables and iPhones to be the drivers of upside going forward. The momentum on iPhone revenues is the primary driver of the upward revision to our revenue and earnings forecasts.”

Chatterjee raised his December 2020 price target for Apple stock to $350 based on his previous $300 estimate. He expects earnings per share to jump from $16.18 to $16.79.

RBC – Robert Muller

Aside from stronger-than-expected iPhone 11 holiday sales, Robert Muller was positive on a number of small fronts.

He wrote that there was “a lot to like” in Chinese sales growth after four straight quarters of declines. While service revenue was slightly below what analysts overall expected, Muller said the 17% jump in the quarter was “impressive.”

Looking forward, Muller wrote that the revelation by Apple that 75% of Watch purchases were new customers was a positive sign for the future to “lock customers” into the iPhone “ecosystem.”

Muller set Apple to “outperform,” and raised the firms target price from $330 to $358.

Wedbush – Dan Ives

Dan Ives has been the biggest Apple ‘Bull’ analyst on Wall Street for over a year. As a result, his “outperform” rating Wednesday stayed the same from earlier this month, as did his price target of $400.

He wrote to clients Wednesday that Apple’s first-quarter results would “put more high octane fuel in the bull thesis.” 

He said the improved sales of Apple products in China were a “clear star of the show,” and that Apple’s prediction of better overall sales in the second-quarter show pent-up demand with the installed iPhone base a positive factor moving forward.

“[That’s] a major feather in the cap for the bulls that should drive the stock higher over the coming weeks and months,” Ives wrote.

Cowen – Krish Sankar

Krish Sankar noted “impressive” cash flow at a nearly five-year high, leaving “ample room” for Apple to invest in acquisitions and future growth.

He was concerned short-term in the impact of the coronavirus “on daily life in China as revenues from the Greater China region are vital to overall iPhone sales,” he wrote.

“From a supply chain perspective Apple does have some alternate suppliers located in Wuhan and are making contingency plans, and for other suppliers outside that region there is an expectation that regular business activities may not resume till February 10th vs the original late January timeframe,” Sankar said.

He highlighted Apple App store activity as a “key metric” this quarter, and said he sees “growth” in the Apple TV+ and Apple Music business.

Sankar wrote that he sees Apple “outperforming” in the coming quarter and raised his price target from $350 to $370, but said that there is room for more growth especially if iPhone sales grow.

Morgan Stanley – Katy Huberty

Head of U.S. Hardware Tech Research at Morgan Stanley, Huberty has been bullish on Apple for well over three years. Her comments Wednesday to clients is no different.

Huberty wrote she is not concerned about a “slowdown” in Apple’s services sector and that the 17% increase was likely explained by “year-on-year declines in the amortization” of Maps, Siri and iCloud services.

Huberty also is predicting – as are many – a low-priced iPhone to debut in March with a 5G version in September.

She was most impressed by Apple’s second-quarter gross profit guidance 5.5% above consensus – the biggest increase since the March 2011 quarter – and the fourth quarter in a row of better gross profit guidance from the company.

Huberty said Apple is a good value for money and set a new price target of $368.