Apple has done it again.
The iPhone maker’s stock slid roughly 1% on Thursday as investors digested its blowout fiscal first-quarter earnings report, for which Apple reported its highest revenue figure ever at $111.4 billion.
Market analysts largely applauded the quarter, taking it as a sign of more good news to come from Apple.
Here’s what four of them told CNBC on Thursday:
Dan Ives, senior equity research analyst covering technology at Wedbush Securities, pointed to Apple’s significantly better-than-expected iPhone revenue, which totaled $65.6 billion versus the $59.8 billion estimated:
“This is a masterpiece quarter. That’s an iPhone number that was not even in the best-case scenario. … We’ve seen double-digit growth in this pandemic. It just shows [that for] the supercycle, the hype was there. The stock’s obviously run. Now it’s a reality. I believe we could be looking at 240 [million]-250 million units for the year and I think this is a sweep-the-leg moment for the bears. I think ultimately, this really throws out the negative thesis, if there was any, on Apple. It’s a real cycle. China continues to fuel on iPhones as well as services. It’s a rerating story still halfway through.”
Betaworks Ventures partner Peter Rojas agreed that the iPhone business would be a key contributor to Apple’s future growth:
“We were looking at this past quarter [as] a generational change in terms of the upgrade cycle with the iPhone 12 and the addition of 5G and, frankly, a lot of people who had held off on upgrading their phones over the past couple of years looking for a significant upgrade. Look, the iPhone business is still very, very strong for them, and I think that it is going to continue to drive growth going forward. The question is really how can Apple continue to use the iPhone and iPad as a launch pad for the services business? They’ve invested a lot in content, in services, in tethering these new subscription businesses to the devices so that when you buy a new iPhone, for example, you get a subscription for several months to Apple TV. … And so, they’re taking a very long view at this and the fact that the iPhone is continuing to perform very strongly I think sets a good foundation for that. And so, it’s hard to be strongly disappointed from my perspective.
Guy Adami, director of advisor advocacy at Private Advisor Group, looked for the possible pitfalls:
“It’s a ridiculously strong quarter. I mean, if you want the flip side of it, if you’re looking for the naysayer, it’s the fact that, listen, they smoked revenue. The revenue beat is ridiculous. And services revenue was a significant beat. Problem is, if people want to look for a problem, is now the product mix. Service revenue’s probably 14.5% of this quarter. Again, I’m probably nitpicking here and maybe that’s what the naysayer can look towards, but again, there’s really nothing not to like here other than the fact that it’s now trading probably 32 times or so next year’s numbers. That is the deep end of the pool for Apple, but again, a lot of people Jerome Powell included, have said valuations in this interest rate environment really don’t make a difference. So, I’m interested to see how it does trade … on the back of this.”
Loup Ventures managing partner Gene Munster, shared some highlights from the company’s post-earnings conference call:
“There was no kind of game of shuffle with the iPhone to get that good number. It was a real number. That was one thing. That’s why the stock kind of dipped a couple percent. And I want to quickly just highlight some other important things … from the call, and overall, the call has been very good. One is that the Mac business was supply constrained in the quarter. That was the only business that was just simply in line, but that probably means that there’s upside to the Street numbers for the March quarter when it comes to Mac. And then I want to give … [Morgan Stanley analyst] Katy Huberty some props here. She did something that as an analyst I always wish I could do. She did it marvelously, which was trying to get [Apple CEO] Tim [Cook] to talk about future products, and she disguised her question about Apple Car — if Apple’s working on a car — as ‘How do you think about new addressable markets?’ And Tim commented that we think about the user experience as important and segments where we can do both hardware, software and services, bring all of that together. Now, I want to be clear, I’m not putting the stake in the ground saying that Apple is going to build a car, but I think that the leanings are in that direction because the future of a car is just that: hardware, software and services. And so, when I put all of this together, I’m surprised that the stock’s not moving higher. I continue to feel great about our opinion that this is a $200 stock in the next couple years.”
