Consumer electronics giant Apple (AAPL) has seen its stock sag since it delivered a blowout December-quarter earnings report. Some analysts think Apple stock is down because the company was too cautious with its March-quarter commentary after a big holiday-quarter beat.
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Wall Street analysts showered Apple stock with price-target hikes after the company’s fiscal first-quarter report late Wednesday. But investors didn’t share the bullish sentiment. On Thursday, AAPL stock dropped 3.5% in the regular session. On the stock market today, Apple stock fell 3.7% to 131.96.
Several analysts noted in their reports on the December quarter that Apple appeared conservative with its outlook. Apple didn’t provide specific targets for sales and earnings in the March quarter, but gave high-level commentary. Apple hasn’t given formal financial guidance since the Covid-19 pandemic started in early 2020.
“Still not issuing guidance, but ‘color’ (is) frustrating for a major company such as this,” Eric Ross, chief investment strategist for Cascend Securities, said in a note to clients. He rates Apple stock as buy with a price target of 170.
Apple Gives ‘Directional Insights’ For March Quarter
On a conference call with analysts, Apple Chief Financial Officer Luca Maestri said the company wouldn’t give a specific revenue range for the March quarter. He cited continued uncertainty related to the pandemic. Instead, he offered “some directional insights” that assume the Covid-19 situation doesn’t worsen.
“For total company revenue, we believe growth will accelerate on a year-over-year basis and, in aggregate, follow typical seasonality on a sequential basis,” Maestri said. However, he flagged an expected deceleration in growth for the Wearables, Home and Accessories unit. Also, the services business will face tough comparisons to the year-earlier period.
Goldman Sachs analyst Rod Hall said many investors expected more upbeat commentary after the big holiday-quarter sales for iPhone 12, Mac and iPad.
“Based on our conversations, we believe that bullish investors had expected a much larger beat for the March quarter as the delayed iPhone launch pushed demand into fiscal Q2,” Hall said in a note to clients. Apple also is dealing with supply shortages for iPad tablets and new Mac computers with Apple-designed M1 chips, which could push sales into the March and June quarters, he said.
Apple’s commentary implied fiscal second-quarter revenue “only slightly ahead of consensus,” he said. Hall is bearish on Apple stock. He rates it as sell with a price target of 83.
Apple Stock On IBD Leaderboard Watchlist
Deutsche Bank analyst Sidney Ho said he was surprised that Apple didn’t resume giving formal guidance.
“While there remains uncertainty from the pandemic, we had thought Apple may return to providing more formal guidance again in the quarter as we view the macro environment as more stable than earlier in the pandemic,” Ho said in a note to clients. He rates Apple stock as buy with a price target of 160.
“Considering the tailwind from work-from-home and Apple trying to catch up with demand with the iPhone 12, we thought Apple also may have suggested fiscal Q2 revenue would be better than typical quarter-to-quarter seasonality,” Ho said.
Evercore ISI analyst Amit Daryanani said Apple’s guidance doesn’t factor in easing Covid-19 headwinds or U.S. government stimulus checks. “Both could be sizable drivers for calendar 2021,” he said in a note to clients. Daryanani rates Apple stock as outperform with a price target of 163.
Apple stock is on IBD’s prestigious Leaderboard watchlist.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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