Apple’s third-quarter earnings report easily beat analysts’ estimates of strength across all of its businesses. Apple reported $81.4 billion in revenue, beating analyst estimates by $7.9 billion. Here’s how 3 Wall Street analysts reacted to Apple’s groundbreaking third-quarter earnings report. Sign up here for our daily newsletter, 10 Things Before the Opening Bell .
Apple delivered another vast earnings report on Tuesday, as its third-quarter revenue and financial income easily beat analyst estimates.
The iPhone company reported revenue of $81.4 billion and earnings per share of $1.30, beating analyst estimates of $7.9 billion and $0.29, respectively.
All of Apple’s business was particularly powerful and all beat analyst estimates, including the iPhone, Mac, iPad, wearables and all-significant accessories and services, which helped boost Apple’s price-to-earnings nearly 30-fold.
Despite the positives, Apple is trading lower following the results, with some analysts fearing the company won’t be competent to surpass the powerful growth seen this year. Apple has given a wide range of guidelines, saying sales will grow by a double, but not as much as the 36% growth seen this quarter.
As investors navigate Apple’s results, here’s how three Wall Street analysts reacted to the third-quarter earnings report.
Wedbush: “Apple introduces another ‘drop the mic’ quarter.”
Wedbush analyst Daniel Ives said Apple’s third-quarter earnings results underscore the iPhone and 5G’s superior cycle.
“Overall, we’d describe this as Apple’s ‘gold-medal’ performance during the quarter, especially when considering the deteriorating chip shortage,” Ives said. Ives believes the strength in Apple’s services business will persevere as the company’s iPhone installed base continues to grow.
Ives said Apple is likely to be worth $3 trillion within the next six to nine months, and that Apple’s services business is only worth $1.5 trillion. Apple’s market capitalization is currently around $2.5 trillion, which indicates a potential rise of 20% over current levels.
Ives praised Apple’s powerful gross margin performance and believes China will persevere to do well, especially with the upcoming launch of the iPhone 13. Ives reiterated his Outperform assessment and price target of $185.
JPMorgan: “Drivers’ upside in the lengthy term even as supply challenges limit optimism.”
JPMorgan praised Apple’s revenue, earnings and gross margin compared to analyst estimates, and cited the company’s rapid-growing services business as validating its massive iPhone installed base of more than one billion users.
Supply chain challenges could limit Apple’s optimism in the near term, but pose little threat to the company in the lengthy term, according to JPMorgan.
“While supply uncertainty limits the near-term view for the company and investors alike, our view is that lengthy-term drivers are unaffected by temporal headwinds, which include stronger-than-expected iPhone demand/market share driving a powerful upgrade cycle, which is set prior Physical revisions to the iPhone 2022 size forecast (where expectations remain low), JPMorgan said.
The bank reiterated its over-rating and $175 target price, and said Apple is the best choice for investors.
Goldman Sachs: “Backlog Dynamics positioned well through year-end.”
Goldman Sachs said Apple’s continued relocation into the scanty supply chain amid the ongoing recovery from the COVID-19 pandemic creates a powerful position for the company, with backlog business dynamics positioning the company well into the end of the year.
The bank views Apple’s revenue growth guidance of less than 36% in the fourth quarter as “cautious although highly dependent on supply dynamics.” The bank expects revenue growth in the next quarter to be 38%.
“We found nothing mistaken with these numbers and we persevere to see Apple’s execution here distinguished given the size and scope of the company. It’s still firm to believe that these trends are sustainable, but for now, our approach is to take the data as it came and the data for this A quarter was very positive.”
The bank reiterated its impartial rating and raised Apple’s target price to $140.