Inc.’s stock isn’t getting much love from investors even after it delivered what one analyst described as “blowout” results for its March quarter. Shares of the smartphone giant were down 0.7% in midday Thursday trading, reversing course after earlier gains of as much as 2.6%, following a fiscal second-quarter .AAPL,
easily topped expectations across all of its product categories, with for the new iPhone and continued strong momentum for the iPad and Mac businesses amid the remote-work boom. Despite the strong results, there are questions about how long Apple’s hot streak can continue. Leaving aside issues like supply constraints, which Apple estimates could have a $3 billion to $4 billion negative revenue impact on its June-quarter results, some analysts have expressed that Apple’s could mean tough comparisons later in the year.
Bernstein analyst Toni Sacconaghi wrote that “ironically, Apple’s Q2 may have been TOO good” since the“will be staring down tough [comparisons] in essentially in FY 22 & next year’s iPhone 13 cycle is likely to be evolutionary/more muted.” Sacconaghi expects it will be difficult for Apple’s business to grow in fiscal 2022. He currently models revenue to be “fractionally” down from his fiscal 2021 projection but cautions that “it could be worse.” He has a market performance rating and a $132 . Bank of America’s Wamsi Mohan also sees “a tough bar” in fiscal 2022 as he considers the future . The and September quarters of fiscal 2021, but comparisons in December will be steep. Then, the next March quarter’s results will be up against the 54% Apple reported Wednesday afternoon.
He maintained a neutral rating on theto $160 from $155. The latest numbers were enough to get one formerly skeptical analyst to throw in the towel on his bearish call, though he wasn’t ready to turn entirely positive on Apple’s prospects. “Our original view that the iPhone cycle would disappoint was wrong,” wrote Goldman Sachs analyst Rod Hall in upgrading the stock to neutral from sell. “Not only has during the cycle, but Mac and iPad have also materially outperformed our forecasts. IPad demand is so strong that the $3 billion to $4 billion of revenue on the table in FQ3 to June.”
Hall declined to turn bullish on the name, writing that “to be more constructive on Apple’s stock, we would want tohigh levels of demand are sustainable well into 2022.” He would also look for “faster-than-expected growth in services as an incremental positive, assuming margins remain stable.” Others were more upbeat, including Raymond James analyst Chris Caso, who wrote that he’s still bullish on the next iPhone cycle. “Our analysis suggests iPhone margins are now about 5% better than the past few cycles, which has been driven by customers’ preference for the higher-end, more expensive models,” he wrote. “We think there’s no reason to believe that will change for the fall cycle. But what’s likely to change is that unit sales will improve.”
In Caso’s view, the momentum for the iPad and Mac businesses may be more brutal to sustain. However, for comparisons, supply constraints could help Apple’s future optics, he suggested. While remote work trends have contributed to, new product introductions have also helped, he argued. “The fact that those products have been supplied constrained would help create a softer landing if those categories were to slow post-pandemic.” Caso has an outperform rating on the stock and boosted his target to $185 from $160. Evercore ISI’s Amit Daryanani also remained upbeat on the future following what he described as “blowout” results.
Apple’s earnings “highlighted the trifecta of – a) accelerating iPhone demand with 5G, b) expansion of gross margins and c) better monetization of services,” he wrote. “The combination of these factors continues to imply a >$5.00 EPS potential for Apple.” Daryanani has an outperform rating and a $175
has risen 13%.