Apple is a ‘bright spot’ amid Big Tech ‘carnage,’ say analysts after earnings

Apple is a ‘bright spot’ amid Big Tech ‘carnage,’ say analysts after earnings

What Big Tech company is not like the others?

Apparently it’s Apple Inc. AAPL,
+7.09%,
that it might be the only large-cap tech company not to see a sharp post-earnings drop in its share price this week, after the smartphone giant delivered a somewhat mixed earnings report, but it seemed reassuring to Wall Street enough about the status of his lawsuit. .

Read: Apple’s profit tops record Mac back-to-school sales outweighing a small loss on iPhones

The stock was up 0.7% before market trading on Friday.

Apple is “the bright spot amidst the mega-cap carnage,” Wells Fargo analyst Aaron Rakers wrote, as Apple beat expectations with its headline results despite the backdrop of “many macro/geopolitical uncertainties,” as well as foreign exchange pressures.

While Apple came up short on its iPhone sales numbers for the September quarter, Rakers noted that the company has been constrained by supply of its Pro models. At the same time, he noted that Mac revenue easily outpaced opinion. consensus, supporting his thesis that “Apple is strongly positioned as a taker in PC stocks.”

In addition, he noted that Apple’s results were affected by a deeper than expected impact of the exchange rate. But “look past the FX headwinds and you’ll see why everyone is hiding at Apple,” he said.

Rakers rates the stock overweight with a price target of $185.

Evercore ISI’s Amit Daryanani called Apple “the last FAANG standing.”

“Overall, earnings and EPS estimates will rise from current levels and, given the widely disappointing EPS calls from big tech, this was an impressive set of numbers and guidance,” he wrote in his note to clients. .

Although Apple did not provide formal financial guidance, it did offer several comments on the December quarter, including that it could see a 10-point FX headwind in the period and acknowledge a “few hundred” basis point hit from a Se will add an extra week to the quarter, even as Mac revenue is slated for a substantial decline.

“This all results in our assessment that revenue growth will be in the mid single digits (our model is 5% vs. 2% for Street),” Daryanani wrote.

Admittedly, it’s not just about the December quarter, he noted.

“Eventually the question will be about the durability of demand beyond the December quarter and the impact of the macro not only on iPhones but also on services,” Daryanani wrote, though he likes Apple’s long-term potential to increase sales to a medium or high level. Digit trim and increase profits at a medium to low rate.

He rates the stock as an outperformer with a target of $190.

Wedbush’s Dan Ives wrote that Apple was “the one bright spot” amid “a week-long horror show for Big Tech earnings.”

“Given the perfect currency/macro storm this quarter, we’d characterize Apple’s December quarter results and comments as net bullish on underlying demand and help rule out noise that iPhone 14 upgrades are slowing in the near future. this cycle,” he wrote, while maintaining an upper rating but cutting his price target to $200 from $220 to reflect a lower multiple.

The latest results could help turn around what Citi Research analyst Jim Suva said was a relatively negative attitude toward Apple shares compared to the rest of the big tech companies.

“The amount of investor negativity about mega-cap tech stocks, especially Apple, is well known, with recent polls showing Apple to be the least favored stock among its peers,” he wrote. “Yes, there are valid concerns that e-retailers will reduce inventory and consumers will have less disposable income given inflation, but we believe consumers will adjust their spending allocations and continue to spend on Apple’s growing platform of products and services.”

He rates the stock as a buy with a price target of $175, down from $185 previously.

Barclays analyst Tim Long was more cautious.

“Taking a step back in print, things get tougher heading into Dec-Q and beyond and we stand by our [equal-weight] rating, primarily due to headwinds sustaining current demand levels as high-end consumers potentially weaken, stricter comparisons on Mac, services further weaken, regulatory overhang (App Store, Google TAC ), shocking macro digital advertising, as well as rich feedback,” he wrote. while raising his price target by one dollar to $156.

Whether that is reflected in the actions is another question.

“In the short term, we expect heightened macroeconomic uncertainty to remain a problem for equities, although some may view AAPL as a relatively safe haven in the macroeconomic storm,” Long continued.

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