Apple Stock: Wall Street’s Take On The Earnings Report

Apple stock failed to lift off after outstanding fiscal second quarter results. The Apple Maven sifts through Wall Street reports to find out if analysts agree with the market’s bearishness.
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A long Big Tech earnings week has come to an end. Apple stock did not react very well to killer fiscal second quarter results, dipping 2% in the couple of trading sessions following the Cupertino company’s earnings day.

Today, the Apple Maven looks at Wall Street’s reactions to Apple’s financial performance. It is always good to keep an eye on analysts’ research notes as their opinions can, sometimes, sway investor sentiment.

Wall Street sign.

Figure 1: Wall St. sign on New York.

Apple stock: bear no more

Probably the most interesting sell-side research report to be published after Apple’s earnings was Goldman Sachs’ Rod Hall’s. The long-time Apple bear has thrown in the towel and upgraded Apple shares to neutral from sell, at a price target of $130 from the previous $83 apiece.

The analyst has been proven wrong on the iPhone upgrade cycle, at least in 2021. Whereas Goldman Sachs previously saw low replacement rates and tight consumer spending leading to a drop in average selling prices, the bank had to come to terms with extraordinary iPhone sales growth. His quote:

“Our original view that the iPhone cycle would disappoint in the midst of COVID was clearly wrong. Not only has Apple done better than we expected on iPhone during the cycle but Mac and iPad have also materially outperformed our forecasts. iPad demand is so strong that the company believes they will leave $3 billion to $4 billion of revenue on the table in fiscal Q3.”

Apple bulls are even more bullish

Another item of notice was the increase in Apple stock’s highest price target to $185 per share from the pre-earnings $175, issued by Wedbush’s Dan Ives and Raymond James’ Chris Caso. The new “mega bullish” target suggests that Apple stock has a respectable 40% upside from current levels.

The St. Petersburg-based research shop seems to be entranced by the iPhone, first and foremost. The current year is all about the catchup in demand for Apple’s smartphone, following a 2020 of disrupted sales and delayed launch of the iPhone 12.

Along the same lines, Wedbush also highlights the iPhone at the core of what the research shop calls “jaw-dropping performance” in fiscal second period. Dan Ives has been one of the most vocal analysts in support of the 5G supercycle, and he seems to think that there is much more to come:

“We believe Apple is a name which will deliver robust numbers the coming year and a further re-rating, with iPhone 12 handing the baton to iPhone 13 in September as part of this multi-year 5G upgrade cycle.”

Not all blue skies

It is hard to find one single expert that did not see Apple’s most recent numbers as outstanding. However, there are still a few on Wall Street who believe the investment opportunity in Apple stock to be less than enticing.

Wolfe Research, for example, increased its price target on Apple shares to $125 to $115. However, the research shop still thinks that Apple stock will underperform. Remember that the analyst’s bear case has been grounded on a potential decrease in Pro and Pro Max demand heading into fiscal third quarter, and on tough late 2021 comps for the Mac, iPad and services.

Other analysts also seem concerned that the best for Apple has been left behind. Bank of America’s Wamsi Mohan maintained his neutral stance on Apple stock, thinking that iPhone strength, relative to previous year, will only last until the December quarter.

Where Wall Street stands

Below is the bigger picture on Wall Street’s opinions of Apple shares. Analysts see the stock as a buy, on average, and hold a consensus price target of $157 per share. Should this price target be reached, Apple stock will have produced gains of 18%.

Figure 2: Consensus analyst rating on AAPL.

Figure 2: Consensus analyst rating on AAPL.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)