Apple on Thursday announced quarterly earnings and growth above Wall Street expectations, prompting many analysts to update their forecasts for the June quarter and beyond.
Tech giant Cupertino posted quarterly profit of $ 58.3 billion in the second quarter of 2020, up 1% year-over-year, even during the aftermath of the coronavirus pandemic .
Although this figure places Apple well below its original forecast of between $ 63 billion and $ 67 billion, the company warned investors in February that it would likely miss this target due to COVID-19.
As expected, iPhone revenues fell in the March quarter with an annual decline of $ 31 billion in Q2 2019 to $ 28.96 billion in Q2 2020. Equipment and services, however, offset growth with better than expected growth.
Apple did not provide guidance for the June quarter due to an uncertain and turbulent period.
How analysts envision Apple for the third fiscal quarter and beyond
Apple did much better in the second quarter than many analysts had expected before the April 30 earnings call. Here’s how many investment banks and analysts are updating their forecasts in light of Apple’s results.
Samik Chatterjee, a senior analyst at JP Morgan, now sees Apple on the verge of outperforming the market as a whole based on several factors, including better-than-expected 2019 iPhone momentum; improved product revenue trends in April; understated iPad and Mac amplifications due to new work in the home environment; and a resilience of the Services better than expected.
Chatterjee also sees an advantage for Apple’s 5G iPhones later in 2020, a forecast bolstered by recent product launches, new Qualcomm data points, and a supply chain being normalized that could alleviate concerns about delays.
Even without indication from Apple for the June quarter, JP Morgan raises its estimates and its price target of December 20 to $ 350, up from the previous forecast of the firm of $ 335.
Because Apple has reported results above consensus, Cowen is optimistic about the title “at a high level”. Analyst Krish Sankar says the service benefits of a homework environment, as well as the forecast improvement in iPhone demand, make AAPL a “defensive stock to own”.
The investment bank estimates that Apple will ship 30 million iPhones in the June quarter, which is slow for the company’s smartphone business anyway. Services, as a bright spot for Apple, “continue to improve”.
Cowen maintains its outperformance rating for Apple and its 12-month price target of $ 335. This remains unchanged from a research note released to investors on April 27.
Piper Sandler analyst Harsh Kumar revised 2020 investment bank earnings per share to $ 12.64 on revenue of $ 266.1 billion from the previous forecast of 12.32 $ on sales of $ 254.7 billion, based on the company’s favorable March quarter results.
Apple did not guide the June quarter and growth of the iPhone and portable clothing is expected to decline year over year. Piper Sandler notes that the resilience of services, iPad and Mac in the remote work era could help the company continue to “run in today’s environment”.
The company maintains its overweight position for AAPL.
What was missing from Apple’s March quarterly results was how the company manages over the long term, said Gene Munster of Loup Ventures. This approach, he theorizes, could provide Apple with a stronger product roadmap and greater growth opportunities than its rivals in 2021.
Despite headwinds from the coronavirus, Apple grew 1% year-over-year. Munster called it a victory, but notes that Apple’s business has a long way to go before it stabilizes. Loup Ventures forecasts a drop in turnover of 5% to 10% in June.
The firm estimates that the iPad and the Mac will improve on a quarterly basis, that the services will remain stable and that Apple will launch its iPhone 5G at the end of September – even if the “years of rupture” should be later in 2022 or 2024 for the 5G Product Cycle.
Wedbush analyst Daniel Ives said Apple’s March quarterly results could be viewed as a “major achievement in a Category 5 dark storm.” While Wall Street was waiting for a horror show, Apple managed to get results that beat consensus on virtually all measures.
The absence of directives for the June quarter, however, testifies to the uncertainty of the COVID-19 situation. Wedbush maintains its outperformance score for Apple and its 12-month price target of $ 335. The firm has maintained this price target since the end of March.
Apple remains a choice of choice for Katy Huberty, analyst at Morgan Stanley, based on increased confidence in the upcoming launch of the iPhone 5G and “stretched iPhone replacement cycles”.
The investment bank remains confident of Apple’s ability to achieve long-term sustainable growth due to the aforementioned stretched iPhone replacement cycle, increasing for services, and a strong balance sheet that allows investments and innovation buyouts.
“Nothing in Apple’s March quarterly earnings report changes our perspective on any of these factors,” wrote Huberty. The company increased its 2020 earnings and earnings per share by 4 to 5%, and increased its 12-month price target to $ 326. Morgan Stanley’s previous price target, released on April 24, was $ 298.