Apple Q1 2013 Earnings Report Disappoints: Analysts React To Falling Stock And Shares, Offer Outlook Moving Forward

By @redletterdave on
  • Barclays chief Marcus Agius
    Barclays: "Capitulation process seems well underway. It seems the reaction to this EPS report is universally negative, especially since AAPL gave subdued guidance and changed the way it does it (they really mean it). We believe a capitulation process is underway, and, while painful, it is healthy since the loftiest expectations should be reined in quite a bit. This spring, Apple should be readying a bevy of new products and services, and, when the builds for these products become known, shares may act a lot better. We have seen sentiment turn quickly before with other leaders like Facebook (in 2012) and Google (in 2011). While this recent sell-off and Apple’s execution of late has tested our patience, we will evaluate Apple from here based on whether these products and services create the kind of excitement we are used to. Maintain OW rating." Reuters
  • Goldman Sachs
    Goldman Sachs: "A tough setback, but the story is not broken. Apple reported 1QFY2013 revenues of $54.51 billion, above our estimate of $53.56 billion and just below consensus of $54.73 billion. EPS of $13.81 was above our estimate of $12.58 and consensus of $13.44. Gross margins of 38.6 percent and operating margins of 31.6 percent were above our forecast of 37.0 percent and 29.4 percent. iPhone, iPad and Mac units all fell slightly short of our expectations, although more resilient margins led to the slight EPS beat. Apple’s guidance was essentially what we expected from the typically conservative management team. The problem, and the key disappointment in the call, was that management made it pretty clear that it was moving toward providing more realistic guidance. In this case, the guidance was a definitive disappointment." Reuters
  • A street sign stands near the Morgan Stanley worldwide headquarters building in New York
    Morgan Stanley: "Reiterate OW. The medium-term risk-reward is attractive with our Base case EPS now close to the Bear case and positive catalysts in F2H13. But near-term catalysts are limited as Apple faces tougher comps in C1Q13; as a result, Apple is being removed from the Best Ideas list." REUTERS
  • JPMorgan Chase
    JP Morgan Chase: "Apples and oranges: Fundamentals and investor expectations continue to diverge. We reiterate our Overweight rating and Dec. 13 price target of $725 on Apple. We are surprised by the sharp correction in shares of Apple in last night’s after-hours trading. At one point, the stock declined 10 percent, as the company tried to explain its new guidance approach. Without splitting hairs too much, we think the new guidance commentary is not much of a change and could restore beat-and-raise potential to the model." Reuters
  • Citigroup 2Q results are due out on Monday
    Citi: "We stand by our recent downgrade and continue to rate the shares Neutral. On lower estimates, our price target falls to $500 from $575." Reuters
  • The logo of Swiss bank Credit Suisse is pictured at the company's headquarters in Zurich
    Credit Suisse: "Three steps to a recovery: none coming imminently, patience required. First, a new product cycle (we expect a high-end iPhone refresh and lower-end iPhone later in 2013). Second, increased carrier expansion: While this is clearly happening slower than we thought, we still believe it's likely over 12 months. Third, increased cash distribution: Apple ended the quarter with $137 billion of net cash some ~30 percent of market cap and 31 percent onshore so the capacity to distribute exits. While all these catalysts are plausible, none are imminent in our view, meaning patience is required." REUTERS
  • A man walks past a Nomura Securities branch in Tokyo
    Nomura: "The weak Q2 dynamics seem to support our view that Apple is moving into an ex-growth phase in which unit growth is likely to come increasingly at the expense of gross margin declines. The net effect is limited earnings growth, EPS that likely tops-out at $50, which is likely to attract a multiple little better than comparable ex-growth peers such as Microsoft and Cisco. An 8x ex-cash multiple on our EPS forecast of $50 plus $89 in excess cash drives our fair value of $490." Reuters
  • A Deutsche Bank logo is pictured in front of the Deutsche Bank headquarters in Frankfurt
    Deutsche Bank: "AAPL reported revs of $54.5B and EPS of $13.81, which beat EPS expectations (v. Street at $54.5B/$13.33; DB at $53.4B/$12.55). Upside was led by iPhone (48M v. DB at 45M) and iPad (22.9M v. DB at 22.0M), which offset light Mac results (4.1M v. DB at 5.4M). Despite the EPS beat, AAPL revised its guidance format, and the combination of margin pressure and decelerating iPhone growth implicit in guidance raises growth concerns. We reset estimates and cut our price target to $575. Trading at $460 in the aftermarket (~7x PE ex cash) we view AAPL as undervalued; maintain Buy." REUTERS
  • A man passes a logo of the Mizuho Financial Group in Tokyo
    Mizuho Securities: "Moving into the Value Territory? F1Q13 Results. While we expect growth investors to continue losing interest in the story as earnings growth is unlikely to materialize this year, the stock offers plenty of reasons for value investors to step in at these levels. We reiterate our Buy rating while lowering our PT to $575 from $600." Reuters
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Apple (Nasdaq: AAPL) may have beaten its own conservative estimates when it announced its financial earnings for the quarter ended Dec. 29, 2012, but Wall Street was not so impressed.

For the second quarter in a row, Apple fell below street expectations. In its Q1 2013 earnings report, Apple posted record quarterly revenue of $54.5 billion and a record net profit for the quarter of $13.1 billion on $13.81 per diluted share. Based on an independent consensus from 67 different analysts, Wall Street had expected $58.84 billion in revenue on $15.11 earnings per diluted share.

Regarding unit estimates, Wall Street’s consensus expected Apple to have sold roughly 50 million iPhones and 23 million iPads; in the final earnings report, however, Apple reported selling only 47.8 million iPhones and 22.9 million iPads.

“We’re pleased to have generated over $23 billion in cash flow from operations during the quarter,” Peter Oppenheimer, Apple’s CFO, said. “We established new all-time quarterly records for iPhone and iPad sales, significantly broadened our ecosystem and generated Apple’s highest quarterly revenue ever.”

Apple had a strong outing in 2013, but while the brand is still very strong, analysts are extremely worried about the company’s stock (Nasdaq: AAPL). After reporting its record-breaking quarterly revenue on Wednesday afternoon, AAPL shares took a major tumble, dropping roughly 10 percent in after hours trading. As of Thursday afternoon, AAPL shares are listed at 450.50, dropping another two percent in after-hours trading.

Apple may have plenty of new and exciting products in its ultra-secretive pipeline for 2013, but its freefalling shares value is leaving many investors, consumers and fans in doubt. Apple needs to shore up its AAPL stock and quickly; they may benefit by listening to what some of its more prominent analysts and investors have to say. From Barclays to Goldman Sachs to JP Morgan, check out our slideshow to see what the biggest players on Wall Street had to say about Apple’s disappointing Q1 2013 earnings report.

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