Technology giant Apple Inc
Here's a look at what analysts are saying about the report and what's next.
The Apple Analysts:
- Goldman Sachs analyst Michael Ng had a Buy rating and raised the price target from $223 to $232.
- KeyBanc Capital Markets analyst Brandon Nispel had a Sector Weight rating and no price target.
- Piper Sandler analyst Harsh V. Kumar had a Neutral rating and lowered the price target from $205 to $190.
- Oppenheimer analyst Martin Yang had an Outperform rating and price target of $200.
- Wedbush analyst Daniel Ives had an Outperform rating and price target of $250.
- Needham analyst Laura Martin had a Buy rating and price target of $220.
"iPhone outperformed in the quarter driven by record upgrades and despite a MSD% (mid-single digit) yoy (year-over-year) decline in Mainland China iPhone revenue and increased competition in the region," Ng said.
The analyst noted the iPhone 15 is "resonating with consumers," which could foreshadow a strong iPhone 16.
Ng also highlighted that Apple is investing in generative AI efforts and the company will share more efforts on that front later this year.
KeyBanc Capital Markets on Apple: Shares of Apple could be "range-bound" for some time given a premium valuation and limited growth, Nispel said.
"We believe expectations need to move lower, yet again," Nispel said. "With investors focused on U.S. upgrade rates and China competition, both the Americas segment and China segment came in below expectations, and we do not believe the dynamics are likely to change in the near term."
The analyst said the key topics on the earnings call were the low upgrade rate in the U.S. and increased competition in China.
"With our model continuing to call for very little growth in 2024, challenges we see facing the Americas segment given low U.S. upgrade rates, and competition in China, we see AAPL as range-bound and likely to perform in line with the Nasdaq at best."
Piper Sandler on Apple: The technology giant reported an "exceptionally clean" quarter according to Kumar.
"However, given the tough y/y comparison, things look to us more challenging for the upcoming March quarter," Kumar said. "We still believe that fundamentals remain strong as the brand continues to grow with the launch of the Vision Pro."
The analyst said headwinds in China for the iPhone were offset by strength in other areas globally. The Services segment also was a "standout" for Kumar.
"AAPL is doing an exceptional job of expanding profitability with margins set to rise once again in the March quarter."
The analyst said all-time records set for product install base of 2.2 billion devices showed the brand's loyalty.
"We remain on the sidelines at this time and are looking for a cleaner handset growth environment."
Oppenheimer on Apple: The first quarter results were better than expected across several segments, Yang said.
Guidance for the second quarter and weakness in China were negatives for the analyst.
"Great China's revenue decline of 13% is worse than expected and will likely drive more concerns into the rest of 2024," Yang said.
The analyst sees long-term growth potential for Apple and highlights the company's "unchallenged market positioning."
"Overall, Apple delivered solid results and guidance against a very tough macro backdrop."
Wedbush on Apple: The company had solid first quarter results, including an iPhone beat, Ives said.
"Apple delivered some good and bad news that will be focus on the Street today with Cupertino beating the Street across the board," Ives said. "A weak China number and softer 'very conservative' March guidance will weigh on shares a bit."
The analyst said China "remains a bumpy ride." The China region typically represented around 20% of iPhones and was 17% in the first quarter.
"Clearly it's no secret Apple is struggling to battle Huawei and geopolitical headwinds near-term."
Ives said this isn't the first time and likely won't be the last time Apple has to take on headwinds in China.
"The quarter was a major step in the right direction which was neutralized by a soft March guide."
Needham on Apple: After the first quarter earnings report, Martin is left questioning where the revenue growth and generative AI discussions are.
The analyst noted that tech giants like Alphabet, Amazon and Meta Platforms mentioned AI and generative AI dozens of times in their recent prepared remarks for earnings reports, while Apple CEO Tim Cook used the words zero times in prepared remarks.
"We believe companies that use GenAI to cut costs and accelerate new product launches will replace those that don't," Martin said. "Which is AAPL?"
The analyst said the product upgrades from Apple "feel like slow motion" in the current environment of generative AI.
AAPL Price Action: Apple shares are down 0.15% to $186.58 on Friday versus a 52-week trading range of $143.90 to $199.62.
