Analysts raised their price targets on Apple (AAPL) - Get Report on Wednesday after the tech behemoth beat revenue and earnings expectations and issued better-than-expected fiscal fourth quarter guidance.
Apple shares were rising 4.4% to $217.87 Wednesday morning, putting the company's market capitalization at roughly $1 trillion.
Apple's earnings per share was $2.18, beating estimates of $2.10. Revenue was $53.8 billion, better than the expected $53.39 billion. Strong wearables revenue, which rose 50% year-over-year, was a major part of the beat. Services grew 18%, when stripping out legal and other non-recurring expenses.
Management guided for fiscal fourth quarter revenue of between $61 billion and $64 billion, against analysts expectations of $60.98 billion.
Here's what analysts said:
JPMorgan, Overweight, Price Target Increased to $243 From $239
"The investment drivers for Apple shares are playing out as expected in relation to, firstly, upside to sentiment in 2019 being driven by outperforming the low bar of investor expectations, who have failed to fully appreciate the multiple levers Apple can pull in terms of promotions and broader distribution channels to drive iPhone volumes. Additionally, we see further upside to investor expectations moving into 2020, led by a strong product cycle comprising of the SE refresh in early CY20 followed by major spec upgrades in Sep-20 (including 5G enabled phones). Lastly, the combination of the above with continued execution on the Services transformation, including the ramp of a slew of new Services launching later this year, are the key reasons to own the stock over the next 12 months in our view."
Morgan Stanley, Overweight, Price Target $247 (Unchanged)
"Near-term, growth should reaccelerate as iPhone replacement cycles peak, emerging markets recover, & new Services launch. We see the potential for meaningful multiple expansion as new Services re-accelerate growth and Apple approaches the September 2020 launch of 5G iPhones, which have the potential to accelerate upgrades and return iPhone to meaningful Y/Y growth. Even incorporating slower Services growth relative to our prior model due to FX headwinds and difficult Apple Care comps our FY19 EPS increases to $11.68 (from $11.54) while our FY20 EPS remains unchanged at $12.68."
Bank of America, Buy, Price Target Increased to $240 From $230
"Services recorded all-time record revenue with double-digit growth in App Store, Apple Music, cloud services and Apple Care. Apple Pay and the App Store Ad business grew triple digits y/y. Apple Pay launched in 17 countries in the June qtr, now completes nearly 1bn transactions per month, and is now adding more new users than PayPay and monthly transaction volume is growing four times as fast. Apple is seeing increased service contract attach rates and is expanding distribution of Apple Care through its partners."
Cowen, Outperform, Price Target Increased to $250 From $220
"iPhone demand is improving as Y/Y compares are less negative with June Q revenues -12% Y/Y vs. -17% Y/Y in the prior quarter, and retail channel sales were up Y/Y starting in June. Apple's trade-in and financing programs will roll out to more geographies and retail / wireless carrier partners in C2H, suggesting there is scope for further device upgrades despite the macro. Services growth remained robust at +18% Y/Y (adjusted and constant currency basis) as a number of sub-segments continue to reach all-time high sales including AppleCare, Music, Cloud services, search ads, and App Store (F3Q record)."