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Apple rises after earnings beat — four experts weigh in

Apple’s profit tree continues to grow.The tech giant jumped nearly 2% after announcing a beat on the top and bottom for the fourth quarter. Better-than-expected results were driven by growth in its services and wearables segments.Dan Ives of Wedbush Securities said Apple’s strong user base and increasing iPhone demand coming off 5G could take this…

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Published on October 31, 2019

Apple‘s profit tree continues to grow.

The tech giant jumped nearly 2% after announcing a beat on the top and bottom for the fourth quarter. Better-than-expected results were driven by growth in its services and wearables segments.

Dan Ives of Wedbush Securities said Apple's strong user base and increasing iPhone demand coming off 5G could take this stock to new heights.

“[It was] a Goldilocks quarter, in my opinion, in terms of just the iPhone numbers … I think services are worth $400 [billion] to $450 billion. You look at the valuation here, I think $265 is the next stop, but this is a stock going into next year [that] could have a three in front of it in terms of the 5G upgrade cycle. … You will get the upgrades, 900 million install base, you have a third of that right now ready for a window of opportunity. This to me is a defining chapter for [CEO Tim] Cook. And so far for Cupertino, it's been about as good as it gets.”

Guy Adami of “Fast Money” said everything has been sweet for Apple so far. While it could be sweeter, he says that the concern now is whether Apple can keep its momentum and the market will be the decider.

“The gross margins are better than expected, the services' gross margins significantly better than expected — 64.1% now. Services are now 20% of this quarter's revenue, that's good. … I think the first-quarter guide is fine. I don't think it's anything remarkable. I think the question is has the run from $175 to $245 been too much, too fast? And, does it stall out here? I don't think it should. I think it's good enough to keep it going, but the market will be the ultimate juror.”

Karen Finerman of “Fast Money” said while the stock has done well, market sentiment is fickle and can sour fast. However, getting into Apple later can mean higher costs.

“The street has fully embraced the story of the evolution. It's now north of an S&P multiple, and we'll see if that trend continues. … The bar was not so high because people thought ‘all right, maybe iPhones, we're not going to see it yet, we'll see it next quarter' … I'm long. I liked the story. I like the evolution, but it is getting a little pricier.”

Gene Munster of Loup Ventures said Apple is in a nice groove coming off a flawless quarter and the transition to 5G could secure its place as a consumer staple.

“This is a flawless, [or] almost a flawless, quarter. … They're going to get the iPhone 5G, the iPhone 5G cycles … So you can build a case that there's a relatively clear ceiling, as much as you can, in a company like this over the next one to two years. … Second is we've talked about wearables and services, put those two together, they come for 28% of the business, and they were likely growing at 25%. … They've taken a core product with the iPhone, and they've built other products around it with services and wearables. And that other piece is becoming a really important part of the story. That to me is a consumer staple company. That's a company that should be at a minimum valued at something similar to , and to at a 25x multiple, which should yield a $350 stock.”