Apple (AAPL) Delivers a Blowout Quarter to Cross $100bln in Quarterly Revenues, Analysts Raise PTs

January 28, 2021 9:32 AM EST
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Apple (NASDAQ: AAPL) crushed analysts’ estimates for its first quarter to cross the symbolic $100 billion mark in a single quarter.

The Cupertino-based giant reported earnings per share of $1.68 per share to easily top $1.41 estimates from the market. Revenue soared 21% to $111.44 billion while the market analysts expected $103.28 billion.

“Our December quarter business performance was fueled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices,” said Luca Maestri, Apple’s CFO.

“These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.”

The company saw its gross margin rising to 39.8%, with market analysts expecting 38.0%. Apple reported better-than-expected results for almost each of its business units.

  • iPhone revenue: $65.60 billion vs. $59.80 billion expected,
  • Services revenue: $15.76 billion vs. $14.80 billion expected,
  • Other Products revenue: $12.97 billion vs. $11.96 billion expected,
  • Mac revenue: $8.68 billion vs. $8.69 billion expected,
  • iPad revenue: $8.44 billion vs. $7.46 billion expected.

CEO Tim Cook said that the total install base for iPhones has now exceeded 1 billion, up from the previously reported 900 million. The total active install base for all Apple products stands at 1.65 billion.

International sales rose to account for 64% of total sales, up from 61%. As expected, China was a key market for apple again with sales there up nearly 57% to $21.3 billion.

“China was strong across the board,” Cook said.

Apple declared a cash dividend of $0.205 cents per share while it had spent over $30 billion on total shareholder return, including buybacks.

Katy Huberty, the equity analyst covering Apple at Morgan Stanley, was particularly impressed by the faster iPhone share gains, installed base growth, and services monetization. She also raised the target on AAPL to $164.00 from the prior $152.00.

“The combination of a larger installed base, fully refreshed product portfolio and continued work/learn from home trends suggest strong double-digit growth over the next several quarters. In fact, we now model FY20-25e revenue CAGR of 10% on the back of accelerating installed base growth, improved services monetization, and a recovery in China. We also see higher gross margins as sustainable given growing FX tailwinds and continued mix uplift across products. Net, we raise our forward revenue and margin estimates with FY21 EPS increasing 6% to $4.47 and FY22 EPS increasing 8% to $4.61, both materially above consensus,” the analyst wrote in today’s note.

Brian White, an analyst at Monness, Crespi, Hardt & Co., also hiked the price objective to $170.00 per share from prior $144.00.

“Apple reported strong 1Q:FY21 results with iPhone revenue returning to growth. We believe Apple’s strong balance sheet, iconic brand, rapidly growing services business, pipeline of innovations and hardline stance on personal privacy will allow the company to emerge from this crisis stronger,” he said in a note sent to clients.

Apple stock price is 0.9% lower minutes before the Thursday open.

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