'Dream scenario for the bulls': Four market analysts talk Apple's blowout quarterApril 29, 2021
Wall Street can't get enough of Apple's blowout quarter.
The iPhone giant reported a 54% increase in sales and authorized a $90 billion share buyback in its fiscal second-quarter earnings report, though did not issue official guidance for the upcoming quarter.
Market analysts were nevertheless impressed. Here's what four of them told CNBC after the report:
Dan Ives, senior equity research analyst for technology at Wedbush Securities, said this could be a "historic year" for Apple:
"If you looked up 'blowout earnings' in the dictionary, it would be Apple's March quarter. I mean, this is what I almost say is the dream scenario for the bulls in terms of what you see on iPhones, services [and] of course on the buyback as well. … Many are skeptical about the supercycle. You look at this quarter. This [is] what I believe is the exclamation mark that the supercycle is alive and well. This looks like this is going to be Apple's historic year where they'll break 231 million iPhones. I think right now, this is the catalyst to get this to 175, $200. This is really, in my opinion, probably the best quarter I've seen from Apple in the last 18-24 months."
Mike Santoli, CNBC's senior markets commentator, said one big risk to Apple is the "perception" of pulled-forward demand:
"The company itself says it does not expect this kind of run rate for iPad and Mac. Now, phones, different story. We don't know if that's going to continue to play out. And then it's what multiple do you put on it? [A] $90 billion incremental stock buyback I think is pretty much in the zone. To me, it seems like a pretty stingy dividend increase, but they're really … emphasizing the buyback. So, the story is intact, it's always just been about how far do we extrapolate this type of performance? We already are paying 29 times currently expected earnings. How much can those earnings go up to bolster that valuation?"
CEO of Superhuman and Apple shareholder Rahul Vohra saw several positive catalysts for the company:
"I actually look more towards the Mac and the iPad businesses. We saw through 2020 and, as we all expected, Q2 as well, extremely strong growth in those businesses fueled primarily by remote work. And I think the question we're all asking is will this continue? I think we will continue to see these businesses grow in 2021. The new iMacs are jaw-droppingly beautiful. The new iPads are real laptop replacements. And remote work will keep these devices as well as iPhone in high demand. And actually, at Superhuman, we just completed a study that underlines all of this. It turns out that 51% of U.S. remote workers are now buying productivity tools out of their own pockets and a further 17% more still plan to do so."
Gene Munster, managing partner at Loup Ventures, said Apple's valuation is still "at the lower end" considering the "transformative tech" it creates:
"Some incredible growth years are still ahead of this company. Everything from hardware as a service — we talk about this. We refer to it as a 360 bundle, to be able to rent a Mac, an iPhone, your services all together. We think that's coming in the next couple of years. We're going to hear likely about mixed reality, those goggles at the developers' conference. That's part of the metaverse. That's a big opportunity. And then remains what they do around automotive. That's a, depending on how you look at the addressable market, multitrillion-dollar addressable market. So, I would say this: let's just take a quick step back. This was a good quarter. It was a great quarter. I don't know what the adjective is. It's probably as good of a quarter, as much upside, as I've seen in a decade from Apple. What I can say is that the naysayers will say it's not sustainable, and I understand that, but that has been a well-traveled theme around this and Apple year in, year out, delivers, and I think they'll continue. I'll leave with this thought: I have a prediction that Apple's going to be the top-performing FAANG for 2021. I am well behind Google right now — I think they're up 30-40%. Apple's just up fractionally. And I continue to stand behind that. I think that results [Wednesday], they will eventually get credit for it and as they start to step into some of these new growth curves."
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