Analyst Thoughts On Apple (AAPL) After Strong Q1 Results

A host of Wall Street analysts are weighing-in on Apple (NASDAQ: AAPL) today following strong first quarter results after the close. The tech-giant reported first-quarter adjusted-earnings of $3.67 per share, which while $1.60 better than the market consensus of $2.07 is not comparable since the company is using a different accounting standard. Revenue for the company was $15.68 billion in the first quarter, which again does not compare to the analyst estimate of $12.05 billion, but was up from $11.9 billion for the year-ago quarter when using the new accounting standard. Apple is forecasting earnings for the second quarter at $2.06 to $2.18 per share, on sales of $11 billion to $11.4 billion on the new accounting standard. The Wall Street estimates earnings of $1.77, on sales of $10.37 billion, which was likely based on the old accounting. Despite the strong results, shares of Apple are up just 1.3% which is likely related to confusion about the accounting change and lower-than-expected iPhone numbers.

• Deutsche Bank: "AAPL adjusted its accounting treatment for iPhone and Apple TV and reported revs of $15.7B & EPS of $3.67 (vs. DB at ~$14.9B/~$3.62). Revenue upside was driven by very strong Mac units (+33% Y/Y) and ASPs increased across all major products categories Q/Q. As expected, AAPL issued conservative guidance and we expect continued robust iPhone and Mac demand, int’l expansion and new product cycles (Tablet, Mac and iPhone refresh) to drive continued momentum. We adjust estimates to reflect the new accounting...iPhone shipments of 8.7M beat our model at 8.5M but was below consensus expectation (Street ~9-10M, DB preview: ~10M)" Maintain Buy and $250 price target.
  
  
• Piper Jaffray: "Revenue guidance was above our numbers for only the third time in 15 quarters (1% ahead of our estimate). On average, Apple has guided revenue down by 4% vs. Street estimates over the same period. December results were led by 33% y/y Mac unit growth, vs. our estimate of +26% y/y. As expected, iPhone units came in below Street numbers (8.7m, Street at 9.1m), but we see 100% y/y growth as evidence that the iPhone opportunity remains on track (ASP's up 2% q/q). iPod units were in-line with the Street, down 8% y/y. Confusion around the new accounting may mitigate the positive impact of a solid quarter, but we expect shares will rebound as investors gain confidence that guidance was, once again, comically conservative...Guidance Conservative Once Again; We Don't Believe Tablet Is In Guidance...Mac Sales Growth Accelerates, Easy Comps Suggest Favorable Growth Will Continue...iPhone Opportunity Still On Track...Given we estimate 40% of iPhones are sold in the US, the AT&T (NYSE: T) quality issue is likely impacting sales. We still believe there is a 70% chance Verizon (NYSE: VZ) gets the iPhone in 2010." Maintains Overweight, raises price target from $279 to $280.
  
  
• Kaufman Bros. "Facing arguably one of the most difficult times, AAPL still posted strongest quarter in company history helped by a favorable mix toward high end...Results a little confusing due to accounting change but we estimate a big beat using subscription accounting...High-end strength defies conventional wisdom and broader industry trends, further supports AAPL's proprietary advantages and customer willingness to pay premium...iPhone shipments came in at 8.7 million, below expectations of 9.5-10 million units, but the company commented it could have shipped more if not for its conscious effort to keep inventory very lean. Inventory increased 26% Q/Q to $576 million from $455 million last quarter off low levels and reflecting higher levels of business. Apple may be susceptible to a slowdown in consumer spending. Its multiple at 18x CY10 EPS is not inexpensive." Reiterates Buy, $253 price target.
  
  
• Canaccord Adams: "Apple reported excellent Q1 results, beating our revenues and EPS forecasts by 6%. Revenue grew 32% Y/Y to US$15.68 billion, well above our US$14.75 billion and consensus of US$14.95 billion. GAAP EPS, based on updated accounting standards, came in at US$3.67, implying 47% Y/Y growth and beating our forecast of US$3.46 and the Street expectations of US$3.51. The upside was driven by higher than anticipated Mac unit sales; while iPhone shipments were not as strong as we anticipated, higher ASPs helped offset the potential downside. Management described successful launches of iMac and Macbook Pro models as well as gaining market share in the PC segment...Management offered Q2/F10 EPS guidance of US$2.06-2.18, below consensus expectations. However, given Apple's history of beating its own expectations, we think these forecasts will likely prove to be highly conservative." Reiterate Buy, $250 price target.
  
  
• Susquehanna: "Apple reported solid earnings upside driven by the top-line, with better Mac units and another quarter of higher than expected ASPs in all three product lines (Mac, iPhone, iPod), while margins were in-line with our estimates. 1QFY10 EPS of $3.67 surpassed our $3.30 estimate, representing 47% Y/Y growth on revenue of $15.7 bln vs. our $14.4 bln estimate. Despite the October launch of Windows 7, the refresh of iMac (November) and MacBook (October) aided quarterly results, with overall Macs impressively growing at 2x the global PC market and gaining share year-over-year. iPhone units were exactly in-line with our estimate (8.7 mln units), and were up 100% Y/Y and 19% Q/Q, which is solid growth following the launch of iPhone 3GS in the September quarter; however, our sense is that this result could disappoint the Street, which was looking for units in the 9 mln range. Gross margin increased 298 bps Y/Y to 40.9%, 10 bps above our 40.8% estimate. While management guided March quarter GM down to 39%, owing in part to higher component costs and seasonally lower volumes, we believe gross margins can sustain the 40% level in 2QFY10 as the iPhone becomes a greater percent of the mix." Reiterate Positive rating, ups price target from $250 to $260.
  
  
• Hapoalim Securities: " strong earnings report and new accounting method that highlights true cash generation. Longer term, we believe the Street is underestimating the growth potential in smartphones, where Apple is uniquely positioned to gain share, thus the iPhone is likely to be a source of upside surprise for Apple over the next year. The earnings impact from a tablet device also seems understated, as is Apple's ability to expand margins and free cash flow in the near term... strong earnings report and new accounting method that highlights true cash generation. Longer term, we believe the Street is underestimating the growth potential in smartphones, where Apple is uniquely positioned to gain share, thus the iPhone is likely to be a source of upside surprise for Apple over the next year. The earnings impact from a tablet device also seems understated, as is Apple's ability to expand margins and free cash flow in the near term." Reiterate Buy, $295 fair value target.
  
  
• Jesup & Lamont: "Apple's 1Q10 report delivered EPS of $3.67 vs. $2.50 in the year-ago period was driven by solid sales growth and strong 40.9% gross margin (vs. 37.9% year ago). iPhone sales dominated the sales mix at 36%, and at 8.7M units, were up 19% Q-Q from 7.4M in September, and while exceeding our 8.5M unit estimate, missed bullish Street estimates of about 9.0M, and might instigate broad rethinking of the stock’s valuation. Surprisingly, computer unit sales were up 33% Y-Y to 3.4M, which helped drive the sales and margin surprise and may serve to offset the perception of iPhone performance." Reiterate Buy, $240 price target.
  
  
• Goldman Sachs: "Apple continued its string of top- and bottom-line beats in the December quarter, but we think Mac strength is offset by a slight shortfall in iPhone shipments, leaving the stock near current levels in the near term. Apple's December-quarter highlights the strength of the company’s three-pronged product strategy, with upside in Macs, and a better mix of iPods (more iPod Touch) driving a higher-than-expected revenue and earnings even though iPhones (8.7 mn units) were in line with our estimate and 300K short of consensus. At the same time, while Apple’s gross margin of 40.9% came in 50 bp above our estimate, the gap was smaller than what we have seen recently and, together with higher opex, somewhat limited the EPS upside ($3.67, 10% higher than our forecast vs. a 20% beat last quarter). Maintains Neutral rating, raises price target from $220 to $230.
  
  
• : Broadpoint.Amtech: "While we got a little "uber-bullish" on the international ramp of the iPhone in December '09 (we forecasted 8.8mil vs. estimated actual of 6.1mil), the ASPs of the iPhone amazingly increased again to ~$620 (up ~2% Q/Q). Post the analysis of the accounting change (from GAAP to pro forma), we believe the AAPL thesis is getting stronger by the day witnessed by solid revenue, margins and product trends. Despite a slightly longer ramp-up of international carriers (our CY10E iPhone forecast moves to 35.0mil from 37.3mil), our pro forma CY10E EPS increases to $12.00 (from $11.75) due to higher overall revenue." Reiterate Buy rating, raises price target from $260 to $264.

You May Also Be Interested In

• Trump Media & Technology Group (DJT) send letter to Nasdaq over “naked” short selling
• Korro Bio (KRRO) Announces $70M Placement
• ServisFirst Bancshares (SFBS) Appoints Jake Farrell as Chairman of Tennessee