We raise Apple's price target as earnings outpaced the rally.

Summarize this content to 100 words Apple has done it again. Despite all the concerns about China, the consumer technology giant fought back with sales and bottom line profits, sending the stock up 6% in after-hours trading. This is why we own it. This is why we don't trade. Apple's fiscal first-quarter revenue reached $90.75 billion, down 4% year-over-year, but ahead of LSEG's forecast of $90.01 billion. Earnings per share rose 1% to $1.53, a record for the March quarter, beating the LSEG consensus estimate of $1.50. Gross margin was 46.6%, an increase of 230 basis points year over year and in line with expectations. (100 basis points (bps) equals 1 percentage point). Apple Why we own our company: Apple's major hardware business and growing services business provide a deep competitive moat and rich bundling opportunities. Management's so-called net cash neutral strategy provides confidence that free cash flow will continue to fund dividends and share buybacks. Additionally, the company's commitment to customer experience has led to industry-leading user loyalty scores and gives it pricing power. There's a reason this is one of only two “own but don't trade” stocks in your portfolio. Competitors: Latest purchase date: April 8, 2014 Start date: December 2, 2013 Conclusion There was a lot to note in Thursday's quarterly results. Top of the list: The consumer technology giant achieved a new record in installed base of active devices across all regions and product categories. This helped drive new records for high margins and recurring revenue from the services business. We were also very pleased to see sales in Greater China exceed expectations, especially given the weak Chinese economy and Wall Street's reluctance to pass on sales mistakes in the region to companies. Masu. Although the growth rate was still negative year-on-year, the iPhone has gradually accelerated in the region and remains the number one and number two best-selling smartphone in urban China. Meanwhile, the company set new sales records in Latin America, the Middle East, Canada, India, Spain, Turkey and Indonesia. In addition to this strong performance, Apple announced his $110 billion stock buyback authorization, the largest corporate acquisition in history. Apple remains strong and we expect positive catalysts going forward. CEO Tim Cook is itching to share the company's artificial intelligence efforts, and he expects to find out more at WWDC in June. “We have made significant investments and look forward to sharing some very exciting things with our customers in the near future,” Cook said. “We believe in the transformative power and potential of AI, and with seamless hardware, software, and services integration, and the unique combination of breakthrough Apple silicon and industry-leading neural Our unwavering focus on engines and privacy is the foundation of everything we create.'' We couldn't agree more. Think about how much information you have on your phone. Apple is positioned to deliver a generative AI-based personal assistant that is truly personal and has many privacy-protecting features. Given all the positive fundamentals and catalysts, Apple stock deserves further upside. Therefore, we raise our price target from $205 to $220. Cash Flow and Capital Allocation Apple generated slightly lower than expected operating cash flow. However, capital investment was also lower than expected. As a result, free cash flow exceeded expectations. Free cash flow is more important than operating cash flow because it is cash that Apple can ultimately return to shareholders through stock buybacks and dividends. Apple ended the quarter with approximately $162 billion in cash, equivalents, and marketable securities on its balance sheet. Subtracting the $105 billion in debt leaves a net cash position of approximately $58 billion. As a reminder, Apple has a long-term policy of net cash neutrality. This means that if cash is not used for acquisitions or organic growth investments, it is returned to shareholders through share buybacks and dividends. In that regard, Apple announced his staggering $110 billion stock buyback authorization and raised its quarterly dividend by 4%. Management also plans to continue increasing the dividend each year, as it has for the past 12 years. During the reported quarter, Apple paid out more than $27 billion to shareholders, including $3.7 billion in dividends and an additional $23.5 billion in 130 million share buybacks. In its quarterly results, Apple's services revenue set a new record. This offset the slight loss in product sales and resulted in higher gross margins and operating income. Products Active device installed base across all products and regions achieved new records. The decline in iPhone sales was difficult to compare with a year ago, when coronavirus-related supply chain issues increased sales by $5 billion in the December-March 2022 quarter. Adjusting for this, iPhone sales were good. Citing research firm Kantar, CFO Luca Maestri said the iPhone is the best-selling smartphone in the US, urban China, Australia, the UK, France, Germany and Japan. Mac's revenue was driven by his M3 MacBook Air. Half of his MacBook Air buyers this quarter were using his Mac for the first time. As we approach the launch of the M2 iPad Pro and 10th generation iPad, the iPad continues to face difficult challenges. Half of his iPad buyers this quarter were using his iPad for the first time. The Wearables, Home, and Accessories segment was weak following last year's tough results, which saw the launch of the 2nd generation AirPods Pro, Watch SE, and 1st generation Watch Ultra. Nearly two-thirds of Apple Watch buyers this quarter were using the product for the first time, pushing the Apple Watch installed base to a new high. Cook said more than half of Fortune 100 companies have purchased Apple Vision Pro units and are “looking for innovative ways to use them to do things that weren't possible before.” Maestri added: “We're seeing so many exciting use cases, from aircraft engine maintenance training at KLM Airlines to sourcing part of immersive kitchen design at Lowe's. “We couldn't be more excited about the extraordinary computing opportunities that will lead to real-time team collaboration.” within a company. ” Service highest revenue record in history. Achieved record performance in both developed and emerging markets. Gross profit increased by 180 bps due to improved product mix. Maestri said the record product install base “provides a strong foundation for future growth in our services business as we see increased customer engagement with our ecosystem.” Both trading accounts and paid accounts hit new all-time highs, with both paid accounts and paid subscriptions increasing by double digit points. Maestri noted that Apple currently has more than 1 billion paid subscriptions across services on its platform, more than double the number four years ago. June Quarter Guidance Guidance assumes no deterioration in the macroeconomic outlook. Despite currency headwinds of 2.5 percentage points, sales are expected to increase by low single digits year over year. This would beat the Street's forecast of 1.5% growth. Services are expected to grow at his double-digit growth rate, similar to the first half of the fiscal year. Services revenue in the first half of 2024 is expected to rise 12.7% year-on-year, beating TheStreet's forecast of 10.6%. iPad sales are expected to grow by double digits year over year, well above the 5.9% expected by Wall Street. Operating expenses are expected to be $14.5 billion from $14.3 billion, in line with expectations of his $14.4 billion. (Jim Cramer's Charitable Trust is long AAPL. See here for a complete list of stocks.) As a subscriber to Jim Cramer's CNBC Investment Club, you receive trade alerts before Jim makes a trade. I will receive it. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in the charitable trust's portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours after issuing a trade alert before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.Apple CEO Tim Cook attends the opening ceremony of the new Apple Jing'an store in Shanghai, China on March 21, 2024. Video Visual China Group | Getty Imagesapple It did it again: Despite all the concerns about China, the consumer technology giant fought back with sales and bottom line profits, sending its stock up 6% in after-hours trading. This is why we own it. This is why we don't trade.
https://www.cnbc.com/2024/05/02/were-raising-our-price-target-on-apple-after-earnings-beat-and-raise.html We raise Apple's price target as earnings outpaced the rally.