Investment firm Wedbush said its outlook for Apple is "firmly unchanged" as its holiday quarter financial results showed strong performance despite a decline in China's market performance. The company has been supportive of Apple since Wedbush called its Vision Pro launch event "impressive." The firm raised its Apple price target to $250 and now announced it will maintain that number even as JPMorgan lowered its price target.
Wedbush analysts wrote in a note to investors: "Apple released some good and bad news today that will be the focus of the market's attention. Although weak China data and 'very conservative' March guidance will have some impact on the stock price, the Cupertino company's results still exceeded market expectations across the board."
Wedbush noted that iPhone sales beat forecasts by about $2 billion, as Apple's services grew 11% in the holiday quarter, remaining solid in the double digits.
"Next comes the bad news," the report continued. "China revenue was down 13% during the quarter, and headwinds in the region remain, but when currency factors are factored in, the impact was only a mid-single-digit decline."
Wedbush described China as a "bumpy ride" and said investors would only partially believe Apple's excuse that year-over-year comparisons were difficult. Analysts at Wedbush said, "It's no secret that Apple has been struggling with Huawei and geopolitical headwinds recently."
However, the company does not believe this is a major long-term issue.
"This is not the first time (nor the last) that Apple has struggled in the Chinese market, and just like it did a few years ago, Apple was able to turn the situation around, making it easier to compare and gain headwinds in the future." Over the past 18 months, Apple's installed base in China has grown by about 20%, and more than 200 million of the 1.2 billion iPhones in the world are now in China, which creates opportunities for a large-scale upgrade in the next 6 to 9 months.
Wedbush also believes that in the next 18 months, "pent-up installed upgrade capacity" will drive "artificial intelligence-driven iPhone 16/17."
The conclusion was that, overall, "the quarter was a significant step in the right direction, but that was offset by weak guidance in March." The March guidance is likely to prove to be "very conservative" and therefore "Apple's prospects for the second half of the year are good."
"Our view on Apple remains firm," the report said, "and we maintain our 'outperform' view and $250 price target."