Any concerns apple (AAPL) was noticing the impact of supply shortages in its December quarterly report (F1Q22) was given shortly after the company delivered an earnings masterclass.
The tech giant delivered record quarterly earnings on top of beats in both headlines and across all segments with the exact iPad.
Morgan Stanley’s Katy Huberty welcomes “one of the cleanest quarters of recent times,” noting in particular the strong growth that Mac and services have shown. The analyst says the results “illustrate the strength and stability of Apple’s product and service ecosystem, a clear differentiation in a more difficult market environment.”
This is especially evident when combined with the “stronger-than-expected” March quarterly guide that the company delivered despite the ongoing – albeit easing – supply constraints and hard-to-match year-on-year comps.
According to Huberty’s calculations, the outlook for the March quarter will lead to revenue growth of around 5% year-on-year. This indicates a sequential growth decline of 24%, which is better than “pre-COVID seasonal” of -31%. “Importantly,” says Huberty, “this also takes into account continued chip shortages, which we see as a potential source of upside in the event’s offerings improving more than expected.”
What this indicates is that despite the continued headwinds, management expects the current quarter’s performance to be “above seasonal strength.”
On top of that, there’s the June quarter’s expected launch of the iPhone SE3, which is also likely to provide a boost in the F3Q quarter. As such, Huberty increased its forecast for revenue growth for FY22 from 6% year-over-year to 8%.
Taking Huberty a step back, Huberty believes the results are likely to “refocus investors on the longevity and durability of Apple’s 1.1 billion and growing user base.” Factor in a “robust innovation engine” that the 5-star analyst expects over the next 3 years that R&D will increase by a 17% CAGR and form the basis for a “growing pipeline of new products and services.” All this means that there is still plenty of room to increase both hardware and service consumption per. user.
Therefore, Apple remains Huberty’s top choice for 2022 “with an estimate of overweight (ie Buy) and a new price target of $ 210 (up from $ 200). The significance for investors? Upside of ~ 21%. (To see Huberty’s track record, click here)
In general, the rest of the street is on the same side. 24 Buy Ratings Compared to 5 Teams Awarded in the Last Three Months, Apple Gives a ‘Strong Buy’ Analyst Consensus. At the average price target of $ 192.18, the stock could rise ~ 11% over the next twelve months. (See Apple’s stock forecast on TipRanks)
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Disclaimer: The opinions in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.