technology giant Apple Inc. AAPL reported quarterly earnings after the market closed on Thursday. Analysts are sizing a fourth and guidance that could be “better than fear” with updated price targets.
Apple Analyst: Morgan Stanley analyst Eric Woodring had an overweight rating and a price target of $180.
Rosenblatt Securities analyst Barton Crockett had a neutral rating and cut the price target from $168 to $160.
Raymond James analyst Melissa Fairbanks received an OutPerform 2 rating and lowered the price target to $185 from $190.
Needham analyst Laura Martin’s buy rating and price target was $170.
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Analyst Takeaway: The ongoing theme of the analysts’ Apple report was “better-than-intimidating.”
Morgan Stanley’s WoodRing pointed upwards from the iPhone and services helped offset the weakness of the Mac, iPad, and wearables. Analysts see guidance moving forward as potentially conservative as a result.
“Estimates are largely unchanged and Apple remains our top pick with a target of $180,” Woodring said.
The analyst said macro challenges remain but Apple is well ahead of its peers.
“While management communicated a more cautious tone about demand for wearables and digital advertising, they are yet to see any broad impact on iPhone results.”
Rosenblatt’s Crockett called the macro headwind “mute” for Apple and liked the fact that the iPhone doesn’t seem to be having an impact.
“Apple’s F3Q22 earnings report is a relief that supply chain headwinds and disruptions to China have eased and were not as bad as feared,” Crockett said. “China surprisingly posted a decline of only 1% at the start of the quarter with a sharp recovery in June following the COVID disruptions.”
Crockett called Apple “an excellent company,” but thought macro and regulatory headwinds could continue to weigh on earnings.
Crockett reiterated an outperform rating with Apple’s “better-than-apprehension” report.
“Despite a number of headwinds, including FX, the China shutdown, macroeconomic concerns and a lack of components, AAPL was able to deliver record June quarter revenues,” said Raymond James’s Fairbanks.
The analyst cut near-term expectations given the uncertainty but saw Apple as a winner.
“The upcoming (or current) storm in the AAPL consumer devices market is likely to weather better than others.”
Needham’s Martin pointed to a strong installed base for iPhones, which hit an all-time high in the quarter and saw a record number of people switching from Android, which is owned by Alphabet Inc. GOOGGOOGLE.
The analyst noted that Apple noted the potential to grow through acquisitions, but preferred to “acquire-hire” or buy out smaller technology companies.
“Our channel investigation in Washington DC leads us to believe that regulators want FAANGs to be small, not big, and therefore will not allow AAPL to buy a big company like Disney or Netflix,” Martin said. Walt Disney Company dis and netflix inc NFLX.
The analyst observed that cash was being used to pay off debt.
AAPL Price Action: Apple shares rose 3.44% to $162.78 on Friday afternoon, in a 52-week range of $129.04 to $182.94.
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