A ‘drop the mic’ quarter: 3 Apple stock analysts explain why they’re boosting price targets after a monster 2nd-quarter earnings report

iphone 12
  • Apple turned in earnings and revenue for its financial second quarter that surged past Wall Street’s expectations
  • Goldman Sachs upgraded Apple shares to neutral from sell following the earnings report.
  • JP Morgan and Wedbush increased their price targets for the tech giant.
  • See more stories on Insider’s business page.

Apple’s second-quarter financial report outstripped expectations set by Wall Street, bolstered by a 66% climb in iPhone sales and the reopening of its 220 stores in the US that had been shut by the pandemic.

Quarterly revenue of $89.6 billion was higher than $77.3 billion expected in a consensus estimate from Yahoo Finance. Earnings of $1.40 per share trounced the average estimate of $0.56 per share.

“Our original view that the iPhone cycle would disappoint in the midst of COVID was clearly wrong. Not only has Apple done better than we expected on iPhone during the cycle but Mac and iPad have also materially outperformed our forecasts,” said Goldman Sachs equity analyst Rod Hall in a Thursday note in which he upgraded Apple to a neutral rating from sell. Apple’s results prompted other analysts to raise their price targets on the tech industry behemoth.

Apple shares advanced during Thursday’s session.

Here’s what three top Wall Street analysts had to say about Apple’s report.

Wedbush: “Cook & Co. Deliver a ‘Drop the Mic’ quarter

iPhone revenue beat Wedbush’s expectations by 17% “in a jaw-dropping performance as the iPhone 12 supercycle is playing out before our (and the Street’s) eyes,” wrote analyst Dan Ives.

The iPhone 12 will hand the baton to iPhone 13 in September as part of a multi-year 5G upgrade cycle, he said, adding that China remains the fuel in the iPhone 12 cycle, with no signs of slowing down based on its recent Asian supply chain checks and supported by Apple’s high-level outlook for the June quarter.

“Of course chip shortages will have a headwind for the next few quarters (roughly $3 billion to $4 billion headwind in the June quarter) for Apple like every technology/automotive player, but the reality is this product cycle is enabling Cook & Co. to achieve its next level of growth and monetization looking ahead,” wrote Ives.

Wedbush raised its price target $185 from $175, with a bull target of $225. It kept its outperform rating on the stock and said Apple remains on its “Best Ideas List” for 2021.

Goldman Sachs: Apple “materially beats in all segments”

In highlighting some of Apple’s figures, Goldman said iPhone revenue of $48 billion was 30% higher than its estimate, and continued work-from-home demand pushed Mac revenue up by 70% year over year to $9 billion, which was 2% higher than its forecast. It noted that Apple mentioned that both Macs and iPads remained supply constrained because of strong demand.

Analyst Rod Hall said since being added to Goldman’s Americas Sell List in mid-April 2020, Apple’s stock has surged 86% compared with the S&P 500’s gain of 49%.

“Our forecasts move up to match the beat and June revenue indications and are now closer to consensus. While we continue to believe current levels of demand are likely to be tough to sustain, we equally acknowledge that high-end consumers have proven far more resilient through the pandemic than we expected,” wrote Hall.

Goldman raised its 12-month price target to $130 from $83.

JP Morgan: “5G has more legs than one quarter”

Analyst Samik Chatterjee said the 5G iPhone cycle is not only spurring strong consumer upgrades and switches, it’s also positioning Apple for a higher share of the overall smartphone market. As well, Apple is likely to see further demand from customers and enterprise channels for Macs and iPads “much longer than investors presume at this time,” stemming from the changing landscape of where and how people work.

“We raise our revenue and earnings estimates for FY21 on the strength, but more importantly raise our out-year iPhone, Mac, iPad and Services revenue expectations as well, as we expect Apple to continue to build on the strength with stronger replacement cycle-led demand and greater Services opportunity on a larger installed base,” said Chatterjee.

The investment bank raised its price target to $165 from $150 and reiterated its overweight rating.

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5 things you should know when buying a refurbished or used Mac

Macbook computer
Buying a used Mac can be a smart move if you do the proper research.

  • Buying a used Mac can save you some money, but there are some important things to look out for. 
  • Be sure to test a used Mac — make sure the screen doesn’t have dead pixels and that the ports work, among other operational aspects.
  • You should also verify the Mac’s specs and ensure the battery is in good condition.
  • Visit Insider’s Tech Reference library for more stories.

You can save a lot of money by buying a previously owned Mac. As soon as a computer leaves the retailer it loses a lot of its value, but a Mac that is a few years old can still be a great value.

5 things you should know when buying a used Mac

There are always a few risks associated with getting a secondhand computer, though, so here are a few things you need to know about buying a used Mac. 

Refurbished is usually better than used

There’s an enormous market for previously owned Macs out there, and you can buy a used Mac directly from a private owner – or you can get a refurbished model which has the advantage of being inspected, have bad components replaced, certified in good condition and even features warranty coverage. In general, getting a refurbished Mac is a lot safer than buying an unwarranted used computer, and you can find refurbished models at reputable reseller sites and even directly from Apple

Beware of the Mac’s impending obsolescence 

Every Mac, regardless of model or age, will eventually become obsolete.  That means it will no longer be supported by Apple, and you won’t be able to install OS updates and security patches. For a used Mac to be a good value, you want one that puts that obsolescence date as far in the future as possible. It’s a good idea to not invest in a used Mac that is more than three years old, because Apple tends to support its computers for about six years. Also, keep in mind that Apple is moving away from Intel processors. As Macs with Intel chips are phased out in favor of Apple’s own silicon, your used Intel-based Mac may start to encounter obsolescence sooner than you expect. 

Get the details on the used Mac

If you’re buying a Mac from a private seller, you might need that person’s help to get a detailed look at the computer before you make the purchase. The easiest way to find out all the important specs at once – including the year the model was produced – is to ask for a screenshot of the “About This Mac” screen, found in the Apple menu. It will tell you details like the model, serial number, RAM, version of the OS, and more. 

Make sure there isn’t a firmware password

The previous owner might have set up a firmware password, which can prevent you from booting your Mac from a USB port, which might be important during troubleshooting or disaster recovery. To find out, start the Mac and hold down the Option key. If you’re asked for a password, ask the owner to turn it off before you buy the computer.  

Test the Mac to make sure it works properly

If you can spend some time with the Mac before you buy, there are some simple tests you can run to make sure the computer is in good working order. Minor cosmetic blemishes are no big deal, but if the battery doesn’t hold a charge, that might be a dealbreaker. 

Perform a factory reset

When you buy a used Mac, you don’t know the history of what’s been on the hard drive. The previous owner probably performed a factory reset, but there’s no reason to take chances – it might have malware installed even if it looks clean. For details on how to do that, read our article “How to wipe a Mac computer, and reset it to its factory settings.”

Refurbished MacBook Pro (1.4GHz quad‑core, 8th‑generation Intel Core i5, 8GB RAM, 256 GB) (small)Refurbished 13-Inch MacBook Pro (Apple M1 processor, 8GB RAM, 256 GB storage) (small)How to wipe a Mac computer, and reset it to its factory settings5 ways to lock a Mac computer to keep your files secureHow to delete saved passwords on your Mac computer, either one-by-one or all at onceHow to set up and use iMessage on a Mac computer, and sync it with your iPhone or iPad using iCloud

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