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Apple’s Earnings Are Coming. Wall Street Is Getting Excited.

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We’re now less than a month away from what should be a fascinating December-quarter earnings report for Apple.

Investors will get their first glimpse at hard numbers on demand for both the iPhone 12 and new Mac laptops powered by Apple-designed processors. Apple (ticker: AAPL) will be pressed for data on how the recent new round of Apple retail store shutdowns has impacted sales. And the Street will be eager to see if Apple resumes providing financial guidance, a practice it suspended throughout calendar 2020 due to the impact of the pandemic. (The earnings-report date hasn’t been announced, but it will likely be right at the end of January.)

Kicking off what is likely to be a deluge of earnings preview notes, two Apple analysts on Tuesday took a look ahead and raised their target prices for Apple shares, with both taking note of strong demand for the new iPhone 12 phone lineup.

Canaccord analyst T. Michael Walkley repeated his Buy rating, upping his target price to $150 from $145, citing signs of strong demand for the iPhone 12 lineup. “Apple is continuing to demonstrate the strength of its product ecosystem, and we anticipate ongoing strong double-digit growth for Macs, iPads and services,” he writes. “While we anticipated iPhone sales would return to year-over-year growth in the [fiscal first quarter ended Dec. 31] despite the delayed and staggered launch of the iPhone 12 products versus the strong iPhone 11 launch last year, we anticipate iPhone sales could reach double-digit growth despite the tough comparable.”

Walkley sees reasons for Apple shares to extend their strong rally in 2020. “With the 5G upgrade cycle likely a benefit during 2021, other hardware categories growing double-digits and continued mix shift toward high-margin services, we believe the share price is compelling for longer-term investors,” he writes.

Credit Suisse analyst Matthew Cabral has been a long-term Apple skeptic, and he maintains a Neutral rating on the stock. But on Tuesday he lifted his price target to $120 from $106, citing a stronger-than-expected consumer preference for the iPhone 12 Pro and iPhone 12 Pro Max, the two higher-end versions of the new phone line.

He notes that wait times for the 12 Pro are still longer than two weeks more than two months after launch, while iPhone 11 Pro demand was in balance after about six weeks. That translates to better-than-expected average selling prices—and higher revenue than he had previously expected.

Cabral says he remains bullish on 5G for driving long-term upgrade momentum, although he remains more conservative for the near term, citing limited 5G coverage and “the lack of a killer app” that requires 5G. He finds that the stock’s current valuation, at 33 times calendar 2021 estimates, “leaves little room for error.”

Apple shares are up 1.5%, at $131.29, in recent trading. The S&P 500 is up 0.9%.

Write to Eric J. Savitz at [email protected]

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