Apple Inc. (NASDAQ:AAPL) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 7.9% to hit US$111b. Apple reported statutory earnings per share (EPS) US$1.68, which was a notable 19% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 36 analysts covering Apple are now predicting revenues of US$318.8b in 2021. If met, this would reflect a solid 8.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 8.0% to US$4.02. Before this earnings report, the analysts had been forecasting revenues of US$317.1b and earnings per share (EPS) of US$4.00 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The consensus price target rose 11% to US$147despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Apple’s earnings by assigning a price premium. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Apple, with the most bullish analyst valuing it at US$175 and the most bearish at US$80.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It’s clear from the latest estimates that Apple’s rate of growth is expected to accelerate meaningfully, with the forecast 8.4% revenue growth noticeably faster than its historical growth of 5.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Apple to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates – from multiple Apple analysts – going out to 2025, and you can see them free on our platform here.
Even so, be aware that Apple is showing 1 warning sign in our investment analysis , you should know about…
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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