Analysts Weigh In On Apple (AAPL) Following Strong 3rd-Quarter Results

July 22, 2009 11:26 AM EDT

After the close, Apple (Nasdaq: AAPL) reported another strong quarter, and shares are up 4% today on the news. In the third quarter, Apple reported revenues of $8.34 billion, versus the consensus of $8.2 billion and $7.46 billion in the year-ago quarter. Apple reported EPS of $1.35, well above the consensus of $1.17. Today, a number of analyst are weighing in on the stock. Here is what some of them have to say:

Deutsche Bank - Chris Whitmore iPhone shipments of 5.2M beat our model (DB at 5.0M) with robust demand outstripping supply. The iPhone remains immensely profitable (we est. 60% GM) as it added an incremental $0.79 in EPS in the Q on a pro-forma basis (adjusting for subscription accounting). Further, Apple will extend the geographic reach of the iPhone from 18 to 80 countries by the end of the Sept Q, greatly expanding its addressable market. Further, we believe Apple is on track to partner with China Unicom as early as this Fall. As a result, we raise our CY09 iPhone unit estimate from 23M units to 26M (Sept Q increased from 6M to 8.5M) Reiterate Buy, raises price target from $150 to $225.

Kaufman Bros - Shaw Wu: Apple reported strong June quarter results driven by a greater-than-expected surge in Mac sales and gross margin upside. We find this particularly impressive in light of high expectations and continued difficult macroeconomic conditions. We had cautioned that AAPL shares could consolidate near term given its significant outperformance and universal expectation of a sizable beat; however Apple was able to exceed even the most optimistic expectations. Reiterate Buy rating and raises price target from $176 to $184.

Canaccord Adams - Peter Misek: Apple reported healthy FQ3 results, handily beating bottom line forecasts by delivering another strong level of gross margins... We believe Apple is now targeting to enter the low-end camcorder market by adding this functionality into its iPod lineup. Based on the anticipation of an expanded target market and Apple’s ability to capture a meaningful share of the low end camcorder market, we have markedly raised our iPod growth assumptions for F2010. We now anticipate iPod shipments of 65 million units (50 million previously) that help drive our F10 revenue up to US$42.6 billion. Our GAAP and pro-forma EPS climb by about US$0.90 to US$7.00 and US$9.10. Upgrades from Hold to Buy and raises price target from $150 to $200.

Collins Stewart - Ashok Kumar Earnings upside was primarily driven by margin strength, which exceeded guidance of 33% by 330 bps. Margin variance was from favorable component pricing, efficient ramp of new products, and lower warranty costs... Apple remains in pole position to monetize the revenue opportunity for mobile internet devices. Maintains Buy, $170 price target.

Piper Jaffray - Gene Munster We are incrementally more positive on shares of AAPL following June results... We believe the Mac and iPhone sales acceleration that started in mid-June will continue through the Sept. quarter... Company can't make enough iPhones to meet demand... Tim Cook appeared to leave the door open for a larger touchscreen device, while closing the door on the possibility of a netbook... Sept. quarter guidance is below the Street, but less conservative than normal relative to Street consensus numbers. Reiterates Overweight rating and raises price target from $180 to $186.

Goldman Sachs - David Bailey Apple's 3-pronged product strategy – iPhone, Mac, and iPod Touch – should continue to drive higher margins and revenue growth. That said, given the strong run in Apple shares since the early-March trough, we would not chase the shares here, as most of this strength seems priced in with the shares trading at 23X our 2010 GAAP EPS estimate (18X our non- GAAP forecast) in after-hours trading. Maintains Neutral, raises price target from $160 to $175.

Susquehanna Price elasticity for MacBooks proved better than expected given the refresh of Apple's notebook lineup in June and lowered price points, with stronger unit growth offsetting a shift down to slightly lower ASP models. Additionally, iPhone momentum continues, as we believe solid demand was not reflected in the in-line units reported in the quarter (though up 626% Y/Y), as iPhone 3GS availability was constrained across all countries. Maintains Positive, raises price target from $170 to $185.

Some other changes:
Bank of America - Reit Buy, Raises target from $160 to $185
BMO Capital - Reit Outperform, Raises target from $152 to $185
Morgan Stanley - Reit Overweight, Raises target from $180 to $195
RBC Capital - Reit Outperform, Raises target from $170 to $190
Credit Suisse - Reit Outperform, Raises target from $165 to $175
UBS - Reit Neutral, Raises target from $141 to $160
JP Morgan - Reit Overweight, Raises target from $167.50 to $170
Bernstein - Reit Outperform, Raises target from $155 to $165
Scotia Capital - Reit Sector Perform, Raises target from $163 to $169
Oppenheimer - Reit Outperform, Raises target from $160 to $185
Caris & Co - Reit Buy, Raises target from $170 to $200
Broadpoint.Amtech - Reit Buy, Raises target from $175 to $210
Atlantic Equities - Reit Overweight, Raises target from $175 to $190
Cross Research - Reit Buy, Raises target from $160 to $190
Barclays - Reit Overweight, Raises target from $173 to $188.

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• Credit Suisse
• Piper Jaffray
• Deutsche Bank
• UBS
• JPMorgan
• Kaufman Bros.
• Morgan Stanley
• Canaccord Adams
• Banc of America
• BMO Capital
• RBC Capital
• American Technology Research
• Collins Stewart
• Gene Munster
• Barclays
• Susquehanna International Group of Companies
• EIM Group

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