Analyst Amit Daryanani sees an increased sense of “I give up” on the buyside.
From a note to clients that landed on my desktop Sunday:
AAPL stock has performed well into this EPS print (+18% since Jun-qtr earnings vs. +0.3% for S&P 500) as expectations for iPhone units have slowly crept higher and there is increased sense of “I give up” on the buyside. Fundamentally, our bullish bias on AAPL reflects:
1) Services acceleration through year- end (vs. street modeling deceleration),
2) better GM upside (vs. street modelling flat),
3) iPhone units seeing upside (though we do think iPhone revenues may see less of an upside given likely ASP headwind) and
4) capital allocation driven EPS tailwinds.
Buyside expectations are for modest upside to iPhone sales (remember, no more units!) but we think two focal points will be a) trajectory of gross- margins (38% would be positive) and b) services growth trends (acceleration would be positive). Also, focus will be on China centric dynamics and iPhone revenues trend line.
Net/Net: We are sticking with our OP rating and raising our price target from $247 to $253 (rolling estimates to FY20, multiple unchanged) as we think the re-rating will sustain and the stock will work higher over 6-12 months as we start to enter the iPhone 5G (hype) supercycle in CY20. Fundamentally, “bears” are playing a tactical 3-month iPhone narrative, while “bulls” will start to get aggressive on any weakness to take advantage of the iPhone 5G narrative that could sustain the stock for 12-24 months.
Maintains Outperform rating and raises price target to $253 from $247.
My take: Dayanani is saying that the buyside—the guys with the big money—were waiting for the stock to fall before they bought.