Apple Revenues Fall, Analysts Remain Positive

Although it faces near-term hurdles, the iPhone business and Apple's competitive position remain sound, say Morningstar equity analysts

Brian Colello, CPA 27 April, 2016 | 3:32PM

Apple (AAPL) continues to face near-term macroeconomic and currency headwinds, reporting fiscal second-quarter results and providing investors with a third quarter outlook below our expectations on several fronts. Nonetheless, we think the iPhone business and iOS ecosystem remain structurally sound and don't believe that Apple's lack of growth points to a weakening competitive position or loss of customer loyalty.

We continue to view Apple as one of the best ideas within the tech sector

We still foresee a rebound in revenue and iPhone unit sales, perhaps as soon as this Fall with the iPhone 7. Yet with shares trading as low as $96 after hours, we think Apple is priced as if the iPhone has already peaked and is facing a prolonged secular decline. While the iPhone no longer appears to be a high growth business for Apple, we continue to believe demand will remain more resilient than what the firm's stock price implies.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Apple Inc142.21 USD-0.50

About Author

Brian Colello, CPA  is a senior stock analyst with Morningstar.

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