Apple’s (AAPL) stronger-than-expected fiscal fourth quarter boosted its stock on Thursday, and has set the tech giant up for further success despite softer sales of its flagship device, according to Wall Street analysts.
The iPhone maker on Wednesday reported profit and revenue that beat Wall Street’s estimates, bolstered mainly by the company’s pivot to services and strong performance in wearables.
Although iPhone revenues fell 9% year over year to $33.36 billion, it was stronger than the $32.25 billion expected by analysts. That was apparently good enough for investors, which sent Apple’s stock over 1% higher in early trading.
“Looking into , Apple is in the midst of a perfect storm, with current iPhone performing at-or-above plan, non-iPhone (especially wearables and services) trending better than expected and growing anticipation for 5G iPhones that will be coming late in the fiscal year,” Piper analyst Michael Olson wrote, who raised his price target on the stock to $270 from $243.
On September 10, Apple unveiled its new line of flagship smartphone — which consists of the iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max. According to Wedbush's Dan Ives, demand for the iPhone 11 in China is tracking 15% to 20% above expectations, and U.S. consumers are also believed to be snapping up more of the units.
Bank of America-Merrill Lynch also got bullish about Apple on Thursday, matching Piper’s new price target of $270.
“We expect shares of Apple to trade higher into year-end given that estimate revisions are likely to be more positive, demand trends appear to be solid for iPhones, [and] wearables are not in supply demand balance and can drive continued upside into 1H20,” among other key reasons, BofAML wrote.
Olson noted that both services and wearable revenues beat the market’s consensus figures, while iPad sales met expectations. Even with slower sales, “revenue guidance for the [coming] quarter is 1% above consensus, as the company is seeing a more favorable trajectory for iPhone and continued strength for non-iPhone revenue drivers,” he said.
Apple’s stock, traded on the Nasdaq, traded above $246 in midmorning dealings.
Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek