A week ago, Apple Inc. (NASDAQ:AAPL) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Apple beat earnings, with revenues hitting US$111b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 19%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 36 analysts covering Apple are now predicting revenues of US$318.8b in 2021. If met, this would reflect a meaningful 8.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 8.0% to US$4.02. Before this earnings report, the analysts had been forecasting revenues of US$317.1b and earnings per share (EPS) of US$4.00 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 11% to US$147. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Apple, with the most bullish analyst valuing it at US$175 and the most bearish at US$80.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Apple's growth to accelerate, with the forecast 8.4% growth ranking favourably alongside historical growth of 5.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Apple to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Apple going out to 2025, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Apple that you should be aware of.
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