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Apple's Earnings: What Wall Street is Saying

Stocks in this article: AAPL

NEW YORK ( TheStreet) -- Apple (AAPL) shares were jumping 4.8% to $439.16 in pre-market trading following a better-than-expected third quarter earnings report.

Fears of an iPhone slowdown were overblown as Apple sold 31.2 million units of the trend-setting mobile device during the three month period ended June 30.

For the quarter, Apple earned $7.47 per share on $35.3 billion, beating expectations. Those surveyed by Thomson Reuters were calling for Apple to earn $7.32 per share in earnings on $35.01 billion in sales.

During the quarter, Apple sold 31.2 million iPhones, a gain of 26 million from the same quarter a year ago.

Here's what some analysts on Wall Street had to say regarding the quarter.

Morgan Stanley analyst Katy Huberty (Overweight, $540 PT)

"With an iPhone beat and better than feared September quarter guidance, consensus estimates are likely bottoming out for the first time in five quarters. We see near-term share price upside on the back of positive supply chain data points ahead of the fall product launches. Remain OW."

"We raise our September quarter revenue and EPS to $35.8B and $7.51, from $35.7B and $7.18 on higher iPhone (31M, up from 27M previously) and gross margin (36.5%, up from 35.7% previously). Our FY14 EPS increases slightly to $41.53 from $41.39."

JPMorgan analyst Mark Moskowitz (Overweight, $545 PT)

"We expect shares of OW-rated Apple to exhibit a relief rally in the near term. The company's Sep-Q outlook requires another reset to consensus estimates ahead of new product launches this fall. The reason we think the stock reacts favorably, though, is Jun-Q iPhone units were better than expected and gross margin results and outlook were better than investors feared. The slowdown in China remains an issue, as sales to the region slowed dramatically in Jun-Q. As for the numbers, we expect consensus estimates to decline in coming days, but the magnitude will be less than in the prior two quarters. Next potential catalysts: whether lower-priced iPhone and iPad mini with Retina Display arrive ahead of the holiday season."

Credit Suisse analyst Kulbinder Garcha (Outperform, $525 PT)

"iPhone resilient in quarter, more to come. iPhone volumes were stronger than expected at 31.2mn (+20% y/y) driven by robust emerging market demand. Going forward, we see further catalysts to spur growth. First, we see an iPhone 5S and low-end iPhone coming in late FQ4 and believe that, net-net, this will be additive to growth. Second, we see additional carriers as a significant driver for Apple's high-end business, and continue to believe that China Mobile and NTT DoCoMo will be added within the next 12 months. We see the potential for iPhone volumes to grow to over 200mn in CY14."

Lazard analyst Edward Parker (Buy, $500 PT)

"June quarter results were respectable, especially given growing fears of weakening end markets. September numbers are headed lower again, but there's been ample talk of this in the market including a growing consensus that F3Q is the last shoe to drop. Unfortunately, commentary on new products was anything but illuminating, meaning that investors will have to hold on a bit longer before getting a clear picture of what the next product cycle means for the model. We think valuation remains reasonable (10x F2014E EPS) on our essentially unchanged numbers and view current levels as a good entry point."

Oppenheimer analyst Ittai Kidron (Outperform, $460 PT)

"Apple reported largely in-line results and provided good enough guidance in our opinion to keep investors engaged until the new iPhone launch. But even with a potential Sept. iPhone launch ahead the overall picture is still a mixed bag. Margins and ASP remain at risk as iPhone and iPad mix moderates (much of the June iPhone upside appears to be iPhone-4/4S driven, partly from international growth but mature markets are moderating too). Apple's on the clock and needs to deliver a surprise with its fall products to convince us the moderation can be slowed. We're cutting our FY14 (moving from $43.35 to $41.23) projections slightly but maintaining our Outperform rating. We currently see limited upside to our $460 PT."

Topeka Capital Markets analyst Brian White (Buy, $888 PT)

"Last night, Apple reported 3QFY13 upside to EPS and offered up a healthy 4QFY13 outlook. With Apple's June quarter results out of the way, investors can now focus on a new product cycle that we expect will begin in September. As we have previously indicated, we believe FY13 will prove to be a year to forget but FY14 will prove to be a year of new product innovations. Trading at less than 6x our CY14 EPS estimate (ex-cash) and the June quarter print out of the way, we believe Apple represents an extraordinary value heading into product launches in the coming months."

-- Written by Chris Ciaccia in New York

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