Is Apple Stock’s Risk-Reward Still Attractive After Q3 Earnings, Lighter iPhone Revenues? ‘New Chapter Of How Investors View Apple’


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Apple, Inc. (NASDAQ:AAPL)’s third-quarter results Thursday failed to impress Wall Street, and the stock promptly reacted with a move to the downside. Here’s what the Street has to say.

The Apple Analysts:

  • Bernstein analyst Toni Sacconaghi maintained a Market Perform rating on Apple stock with a $195 price target.
  • Credit Suisse analyst Shannon Cross maintained an Outperform rating and $220 price target.
  • Needham analyst Laura Martin maintained a Buy rating and $195 price target.
  • Rosenblatt Securities analyst Barton Crockett downgraded Apple shares from Buy to Neutral and maintained a $198 price target.
  • Raymond James analyst Srini Pajjuri maintained an Outperform rating and raised the price target from $180 to $200.
  • UBS analyst Aaron Rakers maintained an Overweight rating with a $225 price target.
  • Wedbush analyst Daniel Ives maintained an Outperform rating and lifted the price target from $220 to $230.

Reduce Overweight Positions, Says Bernstein: Apple’s full-year revenue guidance of 7% growth appears high, says Bernstein’s Sacconaghi, as he sees the iPhone 15 as more evolutionary rather than revolutionary.

The analyst expects the softer uncertain macro and consumer environment to hurt Apple. The company also faces a 53-week comparison, he added.

“We view near-term risk-reward on AAPL as relatively balanced; Investors may want to look reduce overweight positions, beginning in September,” Sacconaghi said. The analyst based on his recommendation on seasonal trading pattern and the stock’s stretched valuation.

The third-quarter earnings outperformance was due to lower-than-expected operating expenses and a lower tax rate, the analyst said.

Credit Suisse’s 3 Key Takeaways:  Following Services business outperformance, fueled by record performances for four categories and quarterly records for three categories, Credit Suisse’s Cross said she sees further acceleration ahead. As the ad market continues its recovery and the company laps tough App Store comps, the business will likely accelerate, thanks to a record installed base of active devices, she said,.

The analyst also pointed to strong gross margin guidance of 44%-45% for…