Shares of Apple (AAPL) are down $21.61, or 5%, at $400.63 in early trading after the company last night missed analysts’ fiscal Q4 estimates for sales and profit, on lower-than-expected iPhone sales, but forecast the current quarter ahead of expectations.
Analysts are living in a bizarro world this morning, with Apple having flipped the usual situation, telling them their expectations were too high last time but not high enough now. Most have chosen to tweak 2012 estimates for higher gross profit, but basically punt on the matter of how many units Apple will sell of this or that.
Aside from the understandable matter of the “lull” in iPhone sales in September, some were disappointed by the 11.1 million units of the iPad, and wonder if there’s an emerging “seasonality” to the iPad (i.e., it doesn’t sell as well in September.)
Price targets are mostly going up or staying pat, with a cut or two here and there:
Keith Bachman, BMO Capital Markets: Reiterates an Outperform rating and raises his price target to $455 from $445. He raised his fiscal 2012 EPS estimate to $33.50 from $33.05, and introduces a fiscal 2013 estimate of $38.80. However, he’s concerned about the iPad. “We think the weakness in iPhone sales can be explained by channel and consumer expectations. However, while we believe that MacBook Air sales may have cannibalized some of iPads, we are disappointed in iPad sales. We have reduced our iPad estimates by 2.5 million units in FY2012.”
Bill Shope, Goldman Sachs: Reiterates a “Conviction List Buy” recommendation and a $520 price target. He raised his estimate for calendar 2011 to $118.57 billion in revenue and $30.68 in EPS, up from $118.48 billion and $30.53 previously. He also cut his calendar 2012 estimates to $137.49 billion and $34.38 per share from $138.6 billion and $34.62. “As consensus estimates are now likely to hug guidance more closely, we expect next quarter�s expectations to remain realistic and perhaps even conservative.”
Gene Munster, Piper Jaffray: Reiterates an Overweight rating and a $607 price target. Munster raises his fiscal 2012 revenue estimate to $138.46 billion from a prior $133.5 billion. He raised his EPS estimate to $34.45 from $32.02. “We see the iPad number (11m vs. the Street at 10m) as the key data point from the quarter. With no particular tailwind in the quarter, the company grew unit sales 166% y/y, and iPad now represents one-quarter of Apple’s revenue and has 75% market share.” “The bottom line, we believe Apple�s fundamentals are firmly intact, and would be buyers on today�s pullback given investor focus over the next nine months will shift to iPhone 4S sell-through, holiday sales, then anticipation of iPad 3 and iPhone 5 (late summer/early fall).”
Mike Walkley, Canaccord Genuity: Reiterates a Buy rating and a $545 price target. He raises his fiscal 2012 EPS estimate to $33.10 from $32.24, and sets a 2013 estimate for $39.01. “Despite this transitional quarter, we continue to anticipate strong earnings growth for Apple with record holiday sales during the December quarter.”
Tavis McCourt, Morgan Keegan: Reiterates an Outperform rating and raises his price target to $530 from $517. He raises his fiscal 2012 EPS estimate to $33.76 from $33.20 and sets a fiscal 2013 estimate for $38.69. “This is the first quarter AAPL has missed expectations in nearly a decade. iPad sales fell short of our estimate as did iPhone as consumers likely were holding off for the iPhone 4S. Geographically, Asia Pacific remains “on fire” with 100%+ Y/Y growth for the seventh consecutive quarter. Our EPS increases are due to better GM offset by slightly slower growth. We expect growth to slow in 2012, but still view 15x forward P/E as very reasonable.”
Jeffrey Fidacaro, Susquehanna Financial Group: Reiterates a “Positive” rating and a $535 price target. He raises his fiscal Q1 EPS estimate to $9.40 from $9.02, and raises his fiscal 2012 estimate to $35.10 from $34.78 based on higher gross margin and lower operating costs but the same unit outlook. “We believe the lower iPhone sales ahead of the anticipated refresh can be explained,” as sales were simply pushed into December, he thinks. The iPad “experienced some seasonality, but expect a demand pick-up into the Holiday season.” His own production “checks” indicate there could be “12 million to 14 million iPad 2 in FY1Q12.” Apple’s bullish outlook “is uncharacteristic and believe sends a positive signal as the CFO’s office did not change its guidance process.”
Shebly Seyrafi, FBN Securities: Maintains an Outperform rating on Apple stock but cuts his price target to $515 from $530 because of the shortfall in iPhone units. “However, this was an understandable product transition effect,” he writes. “We are modeling a large increase in iPhone units in FQ1. We expect iPhone units to grow from 17.1M units in FQ4 to 26.8M units (+57% Q/Q) in FQ1. Since we estimate that iPhone GMs are high (over 50% vs. ~40% corporate average), AAPL should experience a positive mix shift that will create upside to GMs.” Seyrafi is projecting $9.89 per share in EPS this quarter. He cut his fiscal 2012 EPS estimate to $32.27 from a prior $35.83, and sets a 2013 estimate of $35.18.
Brian White, Ticonderoga Securities: Reiterates a Buy rating and a $666 price target. It was a “black swan” event, he writes. “Essentially, we believe the iPhone pause going into the launch of the iPhone 4S was the culprit for this miss and provides investors with a gift ahead of the holiday season. Keep in mind, Apple’s next quarter outlook is stronger than typical, driven in part by what we believe is a resoundingly successful start for the iPhone 4S.” He likes the new tone on the conference call: “We felt Tim Cook’s commentary regarding the potential to return some of Apple’s cash to shareholders was more open then in recent memory, potentially setting up a stock buy back or cash dividend over the next 12-18 months.” White maintains a fiscal Q1 projection of $37.9 billion in revenue, but raises his EPS estimate to $9.54 from $9.47. For the year, he’s raising his revenue estimate to $140.53 billion, from $140.07 billion, and raising his EPS estimate to $34.31 from $33.84.
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