Wall Street Weighs In On Apple's Mixed Quarter

Apple Inc. AAPL shares were down 2.7 percent Friday after the company’s first-quarter earnings report received mixed reviews from the market.

A number of Wall Street analysts weighed in following the report.

Voices From The Street

Bank of America analyst Wamsi Mohan said Apple’s weak iPhone unit sales were offset by higher-than-expected margins and tax benefits. “In our opinion, the unit growth was indisputably weaker (and our estimates for unit growth have come down although ASPs remain robust) but the stock has a backstop from the company’s ability to opportunistically buy back stock equivalent to 20% of the market capitalization,” Mohan wrote.

Bernstein analyst Toni Sacconaghi said Apple’s cash position and its booming services business limit downside for now, but lackluster iPhone sales suggest upside is limited as well. “The stock is trading at the midpoint of its recent historical valuation ranges, and we believe risk reward is coming more into balance, particularly since it is unclear what catalysts might exist for the shares in the near-to-medium term,” Sacconaghi wrote.

BMO Capital Markets analyst Tim Long said Apple’s disappointing March guidance was the biggest headline of the quarter. “While we once expected demand for iPhone X to spill into March, this looks no longer to be the case,” Long wrote.

Morgan Stanley analyst Katy Huberty said investors shouldn’t overlook Apples massive capital return program. “At 11.6x FY19 EPS of $14.50, assuming $75B incremental buyback over two years, Apple is now cheaper than most IT Hardware peers despite increasing recurring revenue,” Huberty wrote.

Loop Capital analyst Ananda Baruah said share buybacks alone could be worth $30 to $40 per share of value. “While currently net-cash stands at $163B, we firmly believe that AAPL is planning to repurchase more than this given its strong FCF generation ($50B - $60B annually),” Baruah wrote.

Ratings And Price Targets

Despite the mixed quarter, Wall Street remains mostly bullish on the outlook for Apple stock, but some firms are more bullish than others:

• Bank of America has a Buy rating and $220 price target.
• Bernstein has a Market-Perform rating and $170 price target.
• BMO has a Market Perform rating and $166 price target.
• Morgan Stanley has an Overweight rating and $203 price target.
• Loop Capital has a Buy rating and $195 price target.

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