A couple of weeks back, stock market pundits and industry analysts were busy forecasting Apple’s (AAPL, Financial) first quarter performance of fiscal year 2015 and had kept their fingers crossed about Apple beating the Street expectations. There was an air of apprehension as some analysts expected Apple to deliver just an average performance as they were not sure about the reception that people would give for the company’s iPhone and other products. But when the results were out with CEO Tim Cook announcing the spectacular results of the company, it brought joy to millions of stakeholders of the company. Apple has reported some impressive figures and they have aided in creating a new record in the company’s history. With such shining numbers, the expectations from the analysts’ corner have also seen a lift in the past few days and let’s explore what analysts are saying on the future of Apple stock. But before that a snapshot of the earnings report would come handy for the investment community. So, here it goes.
The success story that caught several eyes
The phenomenal sales of iPhones were the biggest contributor to Apple’s bottom line for the first quarter.
74.5 million units of iPhones, 21.4million units of iPads and 5.52 million units of Macs were sold this quarter. iPhone sales went up phenomenally by 46% when compared to the fourth quarter of the previous fiscal year. This helped Apple record a whopping $74.6 billion in revenue during the quarter. Great experts at Wall Street had projected that Apple would sell close to 67.5 million units of iPhones for the quarter; and Apple clearly exceeded such projections by a huge margin. Such whopping sales have surprised even the top management of Apple. Tim Cook was generous enough in thanking all customers of Apple for helping the company deliver a mammoth performance for this quarter.
Revenues from iPhone sales were up to $51.2 billion for the quarter, showing a 57% increase when compared on a year-over-year basis. The iPhone 6 and iPhone 6 Plus models have had huge takers and have withstood all the challenges that the smartphone industry posed to them. The other innovative device that contributed to the huge revenues of Apple this quarter was the Mac. Wall Street experts expected Apple to sell around 5.58 million units of Macs this quarter; Apple however has sold 5.52 million units of them. This resembles a huge jump, considering the fact that Apple had sold only 4.84 million units during the same quarter of last year. The emerging markets of China and Japan did contribute heavily to Apple’s success with about $16.14 billion worth of revenue earned by Apple from the Greater China market this quarter representing increase by a whopping 157% and 70% when compared with the past quarter and the first quarter of the 2014, respectively.
With a lot of new products in the pipeline going forward into the next quarter, Apple has predicted revenue to be in the range of $52-$55 billion for the second quarter of 2015.
Analysts have upped their ratings on the stock
Cowen and Company (COWN, Financial) analyst Tim Arcuri has reiterated the Outperform rating and has raised the company’s target price to $115 soon after the earnings release. He strongly believes that the Apple Pay, Apple Watch and the new iPhone 6 ranges would serve as future catalysts promoting the uptrend of the stock in the coming quarters.
During the earnings call, Apple reflected upon the “Capital Return Program” which it aims to achieve for keeping its investors contented at all times. Analysts have opined that such a strategy taken by Apple will serve as a future catalyst fueling its continued growth momentum. Overall, analysts worldwide continue to hold the bullish view on Apple’s stock after the fabulous earnings report card has been out. Out of 62 calls, 45 are a Buy, 14 are a Hold and only 3 are a Sell – this means that most of the analysts are optimistic of Apple’s stock riding to new highs this fiscal year and are holding lofty expectations on the company for the year.
Many analysts have weighed on the Apple stock soon after the first quarter earnings release. For example, BMO Capital Markets and RBC Capital analysts’ have reiterated an Outperform rating revising the target price to $130 from the earlier price set at $123 for the stock.
Final thoughts
Apple surpassed its own expectations with the excellent quarter. With close to $33.7 billion worth of operating cash flow, Apple is all set to be the biggest winner in the stock market for this year as well. Earnings per share stood at $3.06 a share this quarter, beating the forecasted value of $2.60 a share directly by a big margin. The share price also did see a 5% increase during a single day. This is expected to show an uptrend in the coming days as well, bringing good news to the investors and all stakeholders of Apple. As analysts have well highlighted, the firmly driven management strategies and the focus on improvement of shareholder value could serve as the key factors driving the company’s growth in the long run. And surely the Apple stock looks pretty impressive to hold or buy on a long term horizon at this juncture.
