5 Wall Street banks discuss Apple stock after earnings

Apple (NASDAQ:AAPL) stock jumped 6% in premarket trading Friday after the company unveiled better-than-feared results for the fiscal second quarter, and unveiled its biggest-ever stock buyback plan.

As the stock prepares for its much-needed relief rally, we highlighted five analyst takeaways from the tech giant’s latest earnings report.

Better than feared earnings

On Thursday, Apple reported earnings for the fiscal second quarter of 2024 that surpassed Wall Street estimates.

The tech giant reported earnings per share (EPS) of $1.53, surpassing the $1.50 consensus projection, with total revenue reaching $90.75 billion against the anticipated $90.01 billion.

iPhone revenue witnessed a slight decline to $45.96 billion compared to the $46.00 billion forecast.

Still, Apple faced a 4% slump in overall sales and a nearly 10% drop in iPhone sales year-over-year, attributed to challenging comparisons with the previous year.

CEO Tim Cook explained that if not for the heightened sales in the prior year, iPhone revenue would have remained steady, reflecting a tempered demand for the latest iPhone models released in September.

Looking ahead, Apple did not provide specific guidance for the upcoming quarter, but Cook told CNBC that he expects overall sales growth in the low single digits for the June quarter. In the previous June quarter, Apple reported a revenue of $81.8 billion, while analysts looked for a forecast of $83.23 billion.

One of the highlights of the report was Apple’s announcement of a record $110 billion share buyback program, marking a 22% increase from last year's $90 billion. According to Birinyi Associates, this represents the largest buyback in history, exceeding Apple’s previous repurchase plans.

Apple stock rose notably in Thursday after-hours following the news.

Alongside a stock buyback announcement, Apple also said that it will pay a dividend of 25 cents per share, which represents a 1-cent increase from the previous dividend.

Wall Street banks discuss Apple stock

Oppenheimer: “Apple's newly announced $110B buyback (largest in US history) adds to constructive China commentary and a better-than-feared outlook. Overall, Apple delivered solid results and guidance against a tough macro backdrop. Reiterate Outperform.”

Bank of America: “The thesis for our upgrade to Buy earlier this year is playing out with: (1) strong multi-year iPhone upgrade cycle coming driven by GenAI (mgmt. commentary on earnings call very bullish), (2) Services growth reaccelerating, (3) emphasis on Apple silicon across iPhone, Mac, Servers, (4) continued strong capital returns ($110bn buyback announced), (5) upside to GMs (Services was 74.6%) and (6) incentive for institutional clients to increase positions in anticipation of AI features.”

“Our conviction around each of these is stronger post the earnings call that reflected that Apple is growing iPhones in Mainland China, estimate revisions are turning positive and GenAI features will drive a strong upgrade cycle.

Barclays: “While we understand the relief rally on shares due to June-Q guide coming in matching Street consensus and China revenues were better than feared, we continue to see growth headwinds, specifically the ongoing pressure in China, iPhone share losses (echoed by continued weak sell through in China) and a lack of new features for IP16/AI. For the Mar-Q, Apple delivered in-line revenue vs. the Street (led by Services and Macs strength), while product GM missed by 100bps, reflecting higher memory prices and possibly negative mix shift for iPhones in our view.”

Evercore ISI: “Stock should work higher from here as compares get easier, catalysts add up and AAPL executes on AI in a more capital efficient manner vs. other tech companies.”

“Crucially, with June-qtr guide behind, we think a set of positive catalysts should help drive the stock higher as we go into WWDC where AAPL will provide details around their AI strategy across both hardware and services. We think Apple can deliver AI upside without the AI capex we see elsewhere.”

Wells Fargo: “Amid concerns over China iPhone weakness + decelerating services growth, we see AAPL's better-than-feared F2Q24 results + F3Q23 guide as a positive clearing event.”

“While Apple did not say anything specific (also no surprise), we think the comment that AI announcements are coming in the 'weeks ahead' could be enough of a positive catalyst. Apple has a different strategy — smaller models + partnerships (Google (NASDAQ:GOOGL) Gemini?); on-device optimization.”

Despite today’s jump, Apple stock remains in the red on a year-to-date base at -10%, underperforming the broader market.