Bernstein SocGen Group has reiterated its Outperform rating on Apple and maintained a $370 price target. Apple shares were trading at $338, according to the report, which also cited InvestingPro data suggesting the stock was above its estimated fair value.
Apple reported quarterly revenue of $114.5 billion, up 12% year over year. That was 1.6% above Bernstein’s estimate and 0.9% ahead of consensus. Diluted earnings per share were $2.10, beating Bernstein’s estimate by 6% and consensus by 5%.
Revenue growth exceeded Apple’s prior guidance of 9% to 11%. iPhone revenue rose 17%, slightly above the company’s mid-teens outlook. Services revenue increased 10% despite an estimated 2.5 percentage-point additional foreign-exchange headwind; excluding that effect, growth would have been about 12.5%.
Gross margin was 47.9%, at the high end of Apple’s guided range of 47% to 48% and 36 basis points above both Bernstein’s estimate and consensus. Operating margin reached 31.1%, exceeding Bernstein’s estimate by 68 basis points and consensus by 44 basis points.
For the December quarter, Apple expects revenue growth of 7% to 10% year over year and Services growth of 8% to 9%. The company forecast gross margin of 45% to 46%, below Bernstein’s 46.2% estimate and the 46.7% consensus estimate. Management pointed to higher memory costs as the main headwind.
The report also noted that Apple’s fiscal fourth-quarter results exceeded Wall Street expectations, with revenue of $114.48 billion against an expected $113.38 billion and earnings per share of $2.10 versus an estimate of $1.99. The company said diluted earnings per share rose 14% from a year earlier. The source also cited supply constraints and higher spending on artificial intelligence among the challenges facing Apple.
Sources: Investing.com News.