5 analysts discuss Apple stock after earnings: ‘The best is yet to come’
Following Apple’s (NASDAQ:) latest earnings report, analysts have weighed in on the stock, highlighting a generally positive outlook. Despite varying degrees of enthusiasm, analysts suggest that the best is yet to come for Apple.
Bernstein praised Apple’s fiscal Q3 performance, noting that results were “modestly ahead of consensus” with revenues growing 5% and services expanding by 14%. Bernstein emphasized Apple’s strong free cash flow and its restrained capital expenditures, describing Apple’s approach as “capital-light,” which mitigates overinvestment risks.
Analysts raised their FY24 and FY25 EPS estimates and reiterated their belief that fears about Apple’s China business are overblown, seeing the weakness as cyclical rather than structural. Bernstein expects Apple’s AI functionality to drive a strong iPhone upgrade cycle, possibly split between the iPhone 16 and 17 cycles.
Goldman Sachs noted the solid performance driven by iPhone and services. They highlighted Apple’s channel inventory being at the low end of its target range, indicating strong demand. Goldman Sachs is optimistic about a multi-year replacement cycle for the iPhone, supported by robust service margins.
Analysts pointed out that Apple’s gross margin guidance for Q4 could mark a September quarter record, reinforcing the potential for continued strong performance.
Piper Sandler observed that Apple’s June quarter results slightly exceeded expectations, driven by growth in iPad and services. Despite a year-over-year decline in iPhone revenue, the install base reached new highs.
Piper Sandler remains cautious about the consumer market in the second half of the year but acknowledged management’s excitement about Apple Intelligence. They maintained a Neutral rating and a $225 price target, citing appropriate current valuation.
Wells Fargo deemed Apple’s earnings guidance “good enough,” suggesting it may be conservative. They remain positive on the potential for a strong iPhone 16 upgrade cycle, supported by long-depressed upgrade rates and growing consumer familiarity with generative AI.
Wells Fargo also highlighted improving performance in China and reiterated their Overweight rating with a $275 price target.
Bank of America expressed that “the best is yet to come” for Apple, emphasizing the potential for a multi-year iPhone upgrade cycle driven by Apple Intelligence. They noted improving trends across Apple’s portfolio and regions, with services setting an all-time revenue record.
Bank of America sees potential upside in iPhone units, higher ASPs, and gross margins, reiterating their Buy rating with a $256 price target.
Overall, analysts agree that while there are some near-term challenges, Apple’s strong fundamentals and strategic positioning in AI and services set the stage for continued growth and potential stock appreciation.
