Excerpts from the notes I’ve seen. More as they come in.
Toni Sacconaghi, Bernstein: AAPL FY21 Q3 Results – Too good? For the third consecutive quarter, Apple’s results blew out consensus expectations, with revenues up 36% YoY (vs. consensus at 23%). Relative to our forecasts, iPhone (+50% YoY) drove 75% of the beat, with ASPs growing an estimated 25% YoY. Apple’s guidelines for Q4 point to below seasonal growth, which we believe is conservative. We are raising our FY 21 EPS estimate to $5.71 (from $5.37), and our FY 22 estimate to $5.57 (from $5.42). iPhone growth was stronger than normal seasonality, reflecting a strong cycle, and Pro mix remained very elevated vs. history. We now forecast that iPhone units will be 234M (+21%) this year… ironically, strength in the quarter/this year makes us modestly more cautious about FY 22, and we see parallels with the iPhone 6 and iPhone X cycles. We forecast iPhone units to decline 3% in FY 22 with ASPs down 4%. Market perform. $132.
Katy Huberty, Morgan Stanley: A Better FY22 Set-Up. As we wrote in our earnings preview, sustainability of revenue growth remains the key investor debate, and we walk away from F3Q earnings with even more confidence that Apple will grow in the December quarter and in FY22. Demand continues to exceed even the most bullish of expectations, with F3Q revenue 11% ahead of consensus and above even the most bullish whisper ($80B) we heard ahead of the print. This demand strength is underpinned by strong growth across all regions and products/services as well as a recent acceleration in installed base growth and services engagement. As a result of stronger than expected demand, especially for iPhone, and a tight supply chain, Apple will exit the September quarter with backlog. And because Apple enjoys industry leading customer loyalty rates, we don’t view demand as perishable and Apple is therefore set-up for stronger December and FY22 growth. This improved set-up makes us more constructive on AAPL shares near- term and we are buyers on any near-term weakness. Overweight. Target to $168 from $166.
Martin Yang, Oppenheimer: Record Breaking June Q With Substantial Share Gain. Apple’s sales momentum across hardware categories continues to impress. In a record-breaking June Q (total sales up 36% Y/Y), iPhone grew 50% Y/Y while Mac and iPad grew 16% and 12%, respectively. The “super cycle” of iPhone continues as more users switch (from Android) and upgrade (from older iPhones). We continue to believe Apple’s in-house chip, the breadth and synergy across Apple devices, and the temporary lack of major feature innovation across consumer hardware set the company up for a period of accelerating share gains across product categories. The share gain and subsequent boost to active installed base positions the company Sep well for further margin expansion from more sustainable growth in service revenues. Outperform. Target to $165 from $160.
Daniel Ives, Wedbush: Cook & Co. Deliver a “Gold Medal Performance” for June; Supercycle Playing Out. We essentially view this quarter as the second-half and the start of the back stretch of the 5G supercycle and a “drop the mic” quarter for Apple. The outlook was healthy and clearly cautioned with chip shortage comments, a prudent and smart approach heading into its next iPhone launch in September. We believe this quarter is a great next step in driving this stock to a $3 trillion market cap over the next year as the Street further digests the numbers and pent up demand story in Cupertino. Outperform. $185.
Kyle McNealy, Jefferies: More 5G traction… Still early days. Apple announced strong June Q results well ahead of consensus. We think the Street still underappreciates Apple’s opportunity with 5G. In our view, there’s much more to come, as we’re only in the initial innings of Apple’s 5G adoption cycle and upgrade rates remain at the low end of the historical range. Buy. $175.
Wamsi Mohan, BofA: Strong qtr; Sep guide implies deceleration; Dec y/y decline? Apple reported another strong quarter, with broad revenue growth across hardware and services. In our opinion, many investors had expected strength, although50%y/y growth in iPhone revenue, 33% y/y growth in Services and 36% y/y growth in Wearables/Home and Accessories is truly impressive. However, our concern remains that if the Delta variant of COVID creates further lockdowns, Apple could be faced with the dual headwinds of tougher comps and weaker demand in Hardware only modestly offset by any Services re-acceleration. Revenue growth for F4Q was guided lower than the 36% y/y growth in F3Q (see our bridge in Figure 1), but the upcoming Dec, March and now even June quarters could be down y/y in revs and gross profit dollars (highly correlated to stock) given several headwinds. Neutral. $160.
Samik Chatterjee, J.P. Morgan: Time to Start Buying Again. Apple shares have underperformed the broader market by a significant magnitude in 1H21, despite fairly resilient volume outlook for iPhone 12 series, which we trimmed modestly in February of this year, but are now raising following strong share gains in recent months. The upside pressure on volumes for the iPhone 12 series, historical outperformance in the July-September time period heading into launch event, and further catalysts in relation to outperformance for iPhone 13 volumes relative to lowered investor expectations implies a very attractive set up for the shares in the second half of the year and thus expect AAPL shares to outperform the broader market materially in 2H21. Overweight. Target to $170 from $165.
Harsh Kumar, Piper Sandler: Apple Delivers Upside as 5G Cycle Continues. Apple reported a very strong June quarter, beating Street expectations by roughly $8.1 billion. The company noted several segments experienced record revenues during the June quarter. In addition, the September quarter commentary was also solid in our eyes. We are modeling strength in the iPhone business in the September quarter driven by 5G upgrades, along with strong wearables and services growth. We believe Apple is benefiting from the 5G upgrade cycle, which we think is likely to continue for at least another two years. However, we think we could start to see some deterioration in the Mac and iPad businesses as the world returns to normal. Overall, we are increasing our estimates considerably and believe the company is extremely well-positioned. Overweight. $165.
Amit Daryanani, Evercore: BOOM AGAIN. Upside Levers Intact. AAPL reported another blow-out print with rev/EPS coming in at $81.4B/1.30 vs. street at $73B/$1.01 with impressive 36% top-line growth driven by double digit growth across all product categories with notable performance on iPhones (+50% y/y) and Services (+33%)… Debate on “Peak cycle” will persist for a while but fundamentally we see a trifecta of levers in place for AAPL to keep climbing higher – i) iPhone 5G cycle that is still early in adoption, b) monetization of install base across services and wearables and c) improved profitability and FCF as GMs stay higher. Outperform. Target to $180 from $175.
Gene Munster, Loup Ventures: Apple’s Digital Leverage Continues. We’ve watched Apple report more than 70 quarters, and it hasn’t gotten old yet… There were some doubts heading into the print about the sustainability of growth. It’s clear that growth will slow next year, as it will for almost all big tech. For Apple, revenue growth will likely end up mid to high single digits compared to the Street that’s looking for low single-digit growth. We believe that 7-9% top-line growth is sustainable for a few years until Apple launches into new product categories like AR, wearables, wellness, and automation (maybe vehicles). At that point growth will step up again, putting investors’ growth sustainability questions to rest, at least for a few more years.