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Apple Records Quarterly Beat; Shares Down After-Hours

Apple Inc. (NASDAQ: AAPL) beat analysts’ expectations in fiscal Q3 results (ended June 26), driven by strong Services revenue along with outstanding iPhone sales.

However, shares of the tech giant decreased 2.1% in Tuesday’s extended trading session, after closing 1.5% lower on the day. Investors’ disappointment was driven by management’s expectations of slow sales growth in iPhone and iPad in the current quarter, due to supply constraints. Additionally, lower demand for services is expected to fuel the slowdown.

The company reported Q3 earnings of $1.30 per share, which doubled on a year-over-year basis and outpaced Street estimates of $0.82 per share. Revenues jumped 36% to $81.4 billion and came in well ahead of analysts’ expectations of $72.93 billion.

Services revenue came in at $17.5 billion, up 32.6% year-over-year, while Mac revenue grew 15.5% to $8.2 billion. Additionally, iPhone sales of $39.6 billion surged 50% from the same quarter last year. Notably, Apple recorded robust growth in each of its geographic segments including the Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific.

Apple CEO Tim Cook commented, “We’re continuing to press forward in our work to infuse everything we make with the values that define us — by inspiring a new generation of developers to learn to code, moving closer to our 2030 environment goal, and engaging in the urgent work of building a more equitable future.” (See Apple stock charts on TipRanks)

Prior to the Q3 earnings release, Robert W. Baird analyst William Power reiterated a Buy rating and a price target of $160 (9% upside potential).

Power projected “strong results,” to be driven by the work-from-home trend and robust demand for iPhone.

The analyst said, “With close to 1 billion iPhones in use globally, the 5G upgrade opportunity remains significant, with current U.S. carrier promotions an added tailwind. Coupled with ongoing strength in wearables and services, along with iPad and Mac, we remain positive near and long term.”

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating. That’s based on 17 analysts suggesting a Buy, 5 analysts recommending a Hold, and 2 analysts suggesting a Sell. The average Apple price target of $158.33 implies 7.9% upside potential to current levels. Shares have jumped 57.4% over the past year.

TipRanks data shows that financial blogger opinions are 89% Bullish on AAPL, compared to a sector average of 69%.

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