Apple is back in the Wall Street good books after jumping 8.9 per cent to close at $610 a share on 25 April following Apple's financial results announcement. The previous day’s close was $560.28, the lowest point since 12 March. The surging shares apparently helped the Nasdaq notch its best day of the year. The positive reacton to the financial results is echoed in the comments of analysts.
Fortune has rounded up the opinions of analysts following Apple’s financial results. A number of analysts have raised their price targets, with Brian White of Topeka Capital Markets taking the lead with a new price target of $1,111 a share. Most analysts have raised their targets, with most predicting price targets of between $620 and $800. Piper Jaffray's Gene Munster is still betting on $910.
Apple’s stock had a bumpy ride in the run up to the financial results, soaring to $618.63 at one point in April, and then closing at $560.28 on the day the results were announced. Topeka Capital Markets analyst Brian White thinks that the worst is over now. He said: “We believe the negative vibes that have held back the stock over the past couple of weeks will now be replaced with the fear of missing the next leg up."
Any fears about Apple’s ability to meet expectations for the quarter were unfounded. Apple almost doubled its profits in the fiscal second quarter that ISI analyst Brian Marshall described as: “The perfect quarter.”
Various analysts identify the reasons why they think Apple is so successful. J.P. Morgan analyst Mark Moskowitz said: “The company's results are a testament to Apple's optimization of the end user experience, in our view."
Evercore analyst Rob Cihra said: “It's not just about the product cycles, it's about the platform."
Concerns that Apple’s high priced products hold it back were dispelled by Morningstar analyst Michael Holt who said: “The ability to expand the gross margin and deliver massive unit shipment growth signals that Apple is having no trouble moving premium-priced units."
Society Generale analyst Andy Perkins said: "We had become concerned that Apple could struggle to find high sales in markets traditionally dominated by low-end handsets. We believe that the results from China demonstrate that our concerns were misplaced”.
Speaking of China, Apple’s success in that market has made many analysts positive. Piper Jaffray analyst Gene Munster said: “Given Apple's commentary around China growing 5x y/y, our confidence that Apple can win with an iPhone in emerging pre-paid markets is greater than ever."
Atlantic Equities analyst James Cordwell said: “With the prospect of China Mobile being added as an iPhone carrier partner in FY13, we see the potential for revenue from the region to exceed $50bn next fiscal year.”
Also winning praise from analysts is Apple CEO Tim Cook. Argus analyst Jim Kelleher said: “Apple, under Tim Cook, is showing that the company is as vigorous as ever, while becoming ever more global."
Anticipation for the next quarter
Looking to the next quarter, analysts feel that Apple is right to offer conservative guidance for the next quarter.
Deutsche Bank analyst Chris Whitmore said: “The forthcoming iPhone 5 transition (October) will likely dampen iPhone demand over the next couple of Qs.”
Sterne Agee analyst Shaw Wu said: “We believe it is smart to reflect a potential pause and inventory drawdown ahead of the next-generation iPhone 5 launch likely in the September-October timeframe.”
JMP analyst Alex Gaunaa said: “There is likely to be a two-quarter gap between now and the iPhone 5 introduction, ahead of which sales could decelerate further as occurred with the iPhone 4S refresh.”
Slowing sales due to anticipation of new iPhone may not be a bad thing, though. Barclays analyst Ben Reitzes said: “We believe we are well within the 6-month range when shares benefit in anticipation of major product cycles”.
More positive outlooks come from those expecting Apple to launch its own smart television. Wedbush analyst Scott Sutherland said: "While we are not modeling any contribution from Apple TV, we continue to expect an integrated TV to come out at a premium price point, with the key selling points being integration with the iCloud and a new user interface. We note that iCloud has 125 million subscribers signed up since the October launch and Apple has expanded its offering of movies and TV shows. This gives an Apple TV offering a very large immediately addressable market."
Whether or not it’s a television, increased spend on R&D suggests that something is in the works, according to Morgan Stanley analyst Katy Huberty. She said: "R&D expense increased 11% Q/Q, 7 pts above normal seasonal trends indicating increased investments in new products. The last periods that Apple posted R&D growth this much above normal seasonality was two years prior to iPad introduction and 18 months prior to iPhone introduction."