Apple Inc. shares are under pressure today after the world’s most valuable technology company reported a rare miss in quarterly results late Tuesday, as iPhone and other product sales failed to live up to lofty expectations.
But most analysts are willing to be forgiving. They link the disappointing quarter largely to temporary factors and believe Apple will soon return to the position it’s largely been in over the past five years: beating the Street.
“While the Q4 miss – following management transition – may restrain near-term investor sentiment, we think the new management team should be given its opportunity to show what it can do,” RBC analyst Mike Abramsky said in a research note. “Apple’s key franchises (iPad, iPhone) remain early and underpenetrated, with significant growth drivers (4G, China, emerging markets, enterprise, etc.) ahead.”
Mr. Abramsky maintained an “outperform-above average risk” rating and $500 (U.S.) price target.
Canaccord Genuity analyst T. Michael Walkley also views the quarter as “transitional,” and continues to anticipate strong earnings growth for Apple, with record holiday sales during the December quarter. He believes customers simply held off purchasing the iPhone in the latest quarter in anticipation of the iPhone 4S product launch, as his store checks continue to indicate strong global demand.
Mr. Walkley reiterated his “buy” rating and $545 price target.
Baird analyst William Power called the fourth quarter an “iBlip.” He noted the company is expecting record iPhone and iPad shipments in the fiscal first quarter.
Richard Gardner of Citigroup isn’t changing his bullish view, either: “We view this morning’s pullback in AAPL shares as an attractive buying opportunity ahead of what should be a stellar [December quarter]and a series of important product refreshes in coming quarters,” he was quoted by Forbes as saying.
Yahoo Inc.’s third-quarter results were better than many feared despite some major distractions, such as the firing of its CEO and a strategic review that could result in new ownership. RBC Dominion Securities Inc. analysts were also encouraged by the company extending a revenue-per-search agreement with Microsoft through 2013, as it will give the Internet firm more time to improve the performance of the deal and make it more attractive as a takeover target.
Upside: RBC raised its price target by $2 to $22 (U.S.) and maintained an “outperform” rating.
RBC Dominion Securities Inc. analyst Drew McReynolds has upgraded Postmedia Network Canada Corp. to “sector perform” from “underperform,” citing recent stock weakness and the company’s plans to sell the Victoria Times Colonist and other B.C.-based newspapers to Glacier Media. In addition to lowering debt, the sale will allow the company to monetize non-core newspaper and real estate assets, he noted.
Upside: Mr. McReynolds maintained a price target of $9.
Pulp prices have continued to decline this fall after peaking in June and Canaccord Genuity analyst Neal Gilmer has lowered his forecasts going forward. While seeing few potential near-term catalysts that could alter the current trading pattern of pulp supplier Mercer International Inc. , those with a long-term view should consider buying on pullbacks, he said.
Upside: Mr. Gilmer cut his price target by $4 to $11 (U.S.) but reiterated his “buy” rating.
Canaccord Genuity analyst David Tyerman is tempering his financial forecasts for Bombardier Inc.’s aerospace division due to a slower rebound in business jet volumes, lower regional aircraft deliveries, weaker margins and a six-month delay in the launch of the C Series aircraft. But he also contends the company has “good earnings rebound potential” and sees the C Series having the potential to be more successful than investors expect.
Downside: Mr. Tyerman cut his price target by $1 to $7.25 and maintained a “buy” rating.
Cree Inc. first-quarter earnings were just shy of expectations, and Brigantine Research analyst Ramesh Misra notes that guidance for the December quarter was “light.” While the stock has fallen considerably over the past year, he still suggests investors sell shares of the maker of light emitting diodes (LEDs). “Management continues to insist that the company is driving the adoption of LEDs in general lighting, while our checks point to lower LED prices driven by new entrants including those that previously targeted the backlighting market as being the key driver of greater adoption," he said.
Downside: Mr. Misra cut his price target by $3 to $20 (U.S.)