Apple’s ‘Remarkable’ Quarter Merits a New Price Target, Says Canaccord Genuity

There has been grumbling in some corners of the Street, that much better-than-expected quarterly results are not being reflected in some of the stocks’ performance this earnings season. Apple (AAPL) investors will feel hard done by if the market does not ultimately recognize the tech giant’s latest quarterly achievements.

Apple blew the forecasts out of the water in Q2F21, in a display which Canaccord Genuity’s Michael Walkley calls “remarkable.”

Revenue increased year-over-year by 53.7% to reach $89.6 billion, in the process coming in $12.31 billion above the Street’s call. GAAP EPS trounced the estimates – at $1.40 beating consensus by $0.42.

“Demand for the company’s products exceeded both street and our expectations, particularly for the new iPhones,” Walkley said. “We think this demonstrates Apple’s sticky customer base and the company’s strong positioning with remote work/learning trends.”

As Walkley notes, iPhone sales were particularly strong – at $47.94 billion, the figure easily beat the $40.80 billion consensus estimate.

The Street excepted $6.90 billion of Mac revenue – Apple generated $9.1 billion. Same with the iPad, which clocked in sales of $7.8 billion vs. the $5.79 billion forecast.

Walkley says demand for the new Mac products boasting M1 chips was “strong given increased remote learning/work,” and notes that customer satisfaction “remains industry leading.”

Not to be outdone, the Services segment notched “another all-time record” with revenue increasing by 27% year-over-year to $16.9 billion. Wall Street expected $15.53 billion.

While there was no specific guidance, management did suggest “accelerating YoY growth trends with double digit YoY revenue growth in the June quarter.”

That said, given the iPhone was “still ramping” in March after last year’s delayed launch and supply constraints are hitting revenue streams to the tune of $3 to $4 billion, Apple anticipates the quarter-over-quarter revenue decline from the March to June quarter to be “more pronounced” than in previous years.

Nevertheless, the “robust Q2/F21 results, stronger gross margin trends, and management’s commentary,” are enough for Walkley to boost the price target from $155 to $165, suggesting room for 22% upside over the coming months. The 5-star analyst’s rating stays a Buy. (To watch Walkley’s track record, click here)

Turning now to the rest of the Street, where Apple boasts a Strong Buy consensus rating based on 20 Buys vs. 4 Holds and 1 Sell. At $159.3, the average price target implies shares will rise by 19% over the next 12 months. (See Apple stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.