Apple share price: what now as Q4 earnings beat estimates?

Apple ended its financial year on a high, beating analysts’ earnings estimates and increasing sales by 2%, sending its shares higher. But can the stock make further gains?

Last month, Apple announced its financial results for its fourth quarter ending on September 28, with the company recording $64 billion in revenue, up 2% compared to the same period last year.

The tech giant also saw its quarterly earnings climb 4% to $3.03 a share, driven primarily by international sales, which accounted for 60% of total revenue in the period.

‘We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fuelled by accelerating growth from Services, Wearables and iPad,’ Apple CEO Tim Cook said.

‘With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.’

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Analysts upbeat about Apple’s price trajectory

Forecasters are upbeat about Apple’s share price. Based on 36 analysts the average price target for the stock is $249.72, with a high estimate of $300 and a low of $150 a share, according to TipRanks.

As it stands, Apple’s shares closed at $257.50 on Tuesday, so well within the average price guidance that analysts expected. But could the shares rally near $300 levels? Well, the managing director of Morgan Stanley Katy Huberty is certainly optimistic about Apple’s price trajectory.

‘We believe Apple remains under-owned by investors despite the 15% gain since last reporting earnings and therefore if Apple is able to post in-line September-quarter results and December-quarter guidance then the stock can sustain momentum into year-end, barring any major shocks to global markets,’ she wrote in a note.

‘Ultimately investors appear to be owning the stock for the coming 5G iPhone cycle and ramping new services so even in the scenario of light December-quarter guidance, we expect inflows to the name in early 2020 as Apple’s multiple typically expands in the nine to 12 months ahead of major product cycles.’

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Apple sets Q1 2020 targets

Apple certainly is looking to drive its share price higher, unveiling an ambitious guidance for its fiscal 2020 first quarter:

  • revenue between $85.5 billion and $89.5 billion

  • gross margin between 37.5% and 38.5%

  • operating expenses between $9.6 billion and $9.8 billion

  • other income/(expense) of $200 million

  • tax rate of approximately 16.5%

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