Apple (AAPL) was in the spotlight on Friday after the iPhone maker predicted a much stronger-than-expected fiscal first-quarter, pleasing — and surprising — many on Wall Street.
Shares rose 2.5% in premarket trading, while Apple suppliers Skyworks Solutions (SWKS), Corning (GLW) and others also rose before the start of trading.
Citi analyst Atif Malik said the guidance, which includes a return to growth in China, is aided by a better product cycle, namely the iPhone 17 Pro.
“We believe iPhone installed based is the foundation of any refresh cycle,” Malik wrote in a note to clients. “Apple is seeing a record upgrade on iPhones with customers coming from all the different cohorts as people have really liked the newest products, driven notably by features such as the camera or the thinness of the iPhone Air. Dec-Q will be the best quarter ever both in terms of total sales but also in terms of iPhone sales. Looking deeper at the installed base, Apple believes that not only the upgrades are happening at a faster rate, but the number of customers upgrading is also rising. This is coupled with an increase in brand new customers just entering the Apple ecosystem.”
Malik reiterated his Buy rating and upped his price target to $315 from $245 after the results.
KeyBanc Captial Markets analyst Brandon Nispel described Apple’s results as “solid” and said the guidance was “notable,” given that there will be double-digit growth in the iPhone and overall revenue.
However, given the recent move in the stock, Nispel said he expects Apple shares to “take a rest.” Nispel has a Sector-Weight rating on Apple.
Needham analyst Laura Martin, who has a Hold rating on Apple, said the strong guidance “underscores AAPL’s moat,” but wondered whether the recent demand for the iPhone 17 is sustainable.
“We remain on the sidelines for AAPL owing to its expensive relative valuation, increasing fundamental growth headwinds, and rising competitive threats,” Martin wrote in a note to clients. “We believe that AAPL shares won’t work until there is an iPhone replacement cycle.”
Several other firms also raised their price targets on Apple after the results, including Melius, while Jefferies upgraded the stock.