Apple reported a fantastic quarter on Tuesday, as per Jim Cramer, but apparently analysts are not convinced. This was evident from the conference call on which they made investors feel that the company could be in some trouble. To this, Cramer said he “was stunned by the analyst community’s lack of respect for CEO Tim Cook when I listened to the call…. I don’t know what’s wrong with these analysts with their faux buy recommendations, but I think they could benefit from some therapy.”
Photo by igrec, FlickrApple growing, but analysts not convinced
Cramer first targeted Katy Huberty of Morgan Stanley, who gave an Overweight rating to Apple. Huberty asked CFO Luca Maestri to help figure out Apple’s guidance keeping in mind that all of the company’s major projects are running below target. Apple gave conservative guidance, but Cramer emphasized that there is a tremendous demand for the iPhone 7, notes CNBC.
Huberty also asked for an explanation on the R&D budget, which has doubled in the past three years, outpacing sales growth. In response to this, Cook said the company has spent a huge amount on building a services business that generated good revenue of around $6.3 billion and has an accelerating growth rate of 24%.
Next was Sanford Bernstein analyst Toni Sacconaghi, who questioned Cook about the reason for Apple not being able to do better than “flattish” growth despite the fact that its largest competitor is facing problems and that it has a new product. The analyst also asked what investors should think about the iPhone going forward and whether it makes sense for them to think that going forward the business will show growth, notes CNBC.
“Whoa! Apple just posted $46.9 billion in sales and $9 billion in quarterly net income, substantially better than people expected 90 days ago when we thought it would be a terrible quarter. By the way Sacconaghi asked that question, you would have thought the company has no future,” said Cramer.
Different analysts, different reactions
Meanwhile, analysts at Credit Suisse reiterated their Outperform rating on the stock and issued a clear message: “buy any dips.” Analysts at RBC maintained their Outperform rating on the stock, saying that investors had an excellent opportunity to invest in a stock that is currently undervalued because of the recent sell-off.
Deutsche Bank analysts allotted a Hold rating, citing their concern regarding slowing smartphone growth and lengthening refresh cycles in mature markets. Canaccord Genuity maintained its Buy rating with a price target of $140. Analysts at Goldman maintained their Buy rating on the iPhone seller.
