Apple’s earnings have Wall Street learning to ‘stop worrying and love the super cycle’

It’s a strange love that analysts have for Apple Inc.’s stock, leading some of them to turn to Stanley Kubrick’s classic movie in order to describe the company’s latest quarterly results.

Apple’s AAPL, +0.89% earnings beat forecasts, helping to spark a 6% rise to around $159 for the tech titan’s shares in recent premarket action.

One top worry ahead of the release stemmed from reports that Apple was running into problems in building its next iPhone. There had been concerns that such problems could hurt the “super cycle” analysts expect in the fall to push the company’s biggest moneymaker back to sales growth.

For analysts at RBC Capital Markets, Tuesday evening’s earnings update largely puts those fears to rest.

“The material surprise was strong Sept-qtr guide that effectively implies NO iPhone launch delay, despite myriad of blog and supplier commentary to the contrary,” wrote an RBC team led by Amit Daryanani in a note.

In other words, Apple’s guidance for its September quarter was the big shocker, according to Daryanani and his colleagues.

They raised their price target for the stock to $176 from $168 and backed their rating of outperform, or buy. The RBC analysts titled their note “How I Learned To Stop Worrying & Love The SuperCycle,” in a reference to Kubrick’s dark comedy “Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb.”

Apple said it sees revenue in a range of $49 billion to $53 billion for its fiscal fourth quarter. That suggests that the company does not expect sales of new iPhones to be pushed into the next fiscal year, a MarketWatch First Take notes.

PiperJaffray analysts made a similar point about the worries around Apple’s key gadget.

“The outlook implies that fears of an iPhone X launch delay, and/or limited availability of the device, may have been overblown,” wrote Michael Olson and Yung Kim in a note.

The PiperJaffray team lifted their price target to $190 to $158 and maintained their rating of overweight, or buy.

Other analysts are more downbeat, however.

KeyBanc’s team have taken a difference stance to that of Apple CEO Tim Cook. He said chatter around the path for future iPhones was greater than normal and affected sales, yet any “pause” due to such buzz “probably bodes well for the future.”

In contrast, the KeyBanc analysts led by Andy Hargreaves said “pent-up demand does not appear to be building.” They put a price target of $150 on a stock and reiterated their rating of sector weight, or hold.

“We believe the current valuation balances the potential for upside in the coming cycle, with the likelihood for a longer-term slowdown in growth related to high-end smartphone market saturation and diminished value in incremental innovation,” Hargreaves and his colleagues wrote in a note.

Many analysts have been highlighting a potential “super cycle” surrounding Apple’s next updates to its smart phone — because of both form-factor upgrades and the record number of older-model iPhones in use that may inspire an unusually large number of purchases of the latest model.

[Source”pcworld”]