Investors went into the fiscal 2q18 report less

Info icon This preview shows pages 4–6. Sign up to view the full content.

favorable mix and ASP for the iPhone, and the usual April increase in shareholder return. Investors went into the fiscal 2Q18 report less concerned about results and more concerned about guidance. On that score, Apple did not disappoint, guiding for mid-teens annual revenue growth that was also slightly above consensus. AAPL remain inexpensive compared with the market and peers, and is particularly attractive based on discounted free cash flow valuation. We believe that Apple’s positives are not fully reflected in the share price. We are reiterating our BUY rating and raising our target to $225 from $210. RECENT DEVELOPMENTS AAPL is up 15% year-to-date in 2018, while the peer group of computing, storage & information-processing companies in Argus coverage is up 12%. AAPL rose 46% in 2017; the peer group was up 18%. AAPL rose 10% in 2016, slightly lagging the 12% gain for the peer group. In 2015, AAPL fell 5%, its first down year in a decade, while the peer group declined 16%. AAPL shares rose 38% in 2014, ahead of the peer group’s 16% gain and 11% capital appreciation for the S&P 500. Apple is still trading higher in the afterglow of its well-received fiscal 2Q18 report. From $168 on 5/1/18 just prior to the report, AAPL has advanced 15% to the $193 range. That gives the company a market cap of about $950 billion. A share price of $198 may be enough to push Apple above $1 trillion in market capitalization; however, based on share buybacks, AAPL could require a slightly higher share price to cross above that mark. Apple hosted its annual worldwide developers conference (WWDC) in June 2018, though the event barely registered in the stock price. The convention did reveal some meaningful software developments, even though few if any had real “wow” factor. Investors have long speculated on the possibility that iOS, the operating system for iPhone and iPad, might become interoperable with, or even subsumed into, Mac OS, the operating system for Apple’s PCs. Few expect one OS to subsume the other, but better interoperability would be a logical goal for Apple as it tries to nudge iPhone owners with Wintel PCs to migrate to Apple Mac PCs. At WWDC, Apple announced a project in which a single app would be able to run on both iOS and Mac OS. This is a toe-in-the-water of interoperability, when some investors and Apple acolytes were hoping for full immersion. Still, CEO Cook did suggest that the company would take further steps to integrate the two operating systems.
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

M ARKET D IGEST - 5 - For the new Mac OS, called “Mojave,” Apple introduced dark mode, which will automatically adjust screen brightness to the time of day and/or room ambience. For the new iOS iteration, iOS 12, Apple focused on performance improvements. The company claims that some apps opened in iOS 12 will launch twice as fast as they launched under the predecessor OS. The new iOS will now also support FaceTime calls with up to 32 participants, enabling families, enterprises, and affinity groups to easily initiate and conduct conference calls.
Image of page 5
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.
  • Fall '13
  • RetoGallati
  • Revenue, ........., Discovery Channel, Discovery Communications

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern