Apple Stock is Up While the Rest of Wall Street Sells Off

(Image credit: Costfoto/NurPhoto via Getty Images)

Apple (AAPL) is is the only Magnificent 7 stock trading in positive territory Friday after the tech giant beat top- and bottom-line expectations for its fiscal third quarter.

In the three months ended June 29, Apple's revenue increased 4.9% year-over-year to $85.8 billion, driven by 14.1% growth in services to $24.2 billion. Its earnings per share (EPS) improved 11.1% from the year-ago period to $1.40.

"During the quarter, our record business performance generated EPS growth of 11 percent and nearly $29 billion in operating cash flow, allowing us to return over $32 billion to shareholders," said Apple Chief Financial Officer Luca Maestri in a statement. "We are also very pleased that our installed base of active devices reached a new all-time high in all geographic segments, thanks to very high levels of customer satisfaction and loyalty."

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

The results handily beat analysts' expectations. Wall Street was anticipating revenue of $84.5 billion and earnings of $1.35 per share, according to Yahoo Finance.

Apple also said that Mac sales increased 2.5% to $7 billion and iPad sales surged 23.7% to $7.2 billion. On the other hand, iPhone sales slipped 0.9% to $39.3 billion and Wearables, Home and Accessories sales decreased 2.2% from the year-ago period to $8.1 billion.

On Apple's conference call, Maestri said the company expects revenue to grow at a similar rate in its fourth quarter from the prior year, including a double-digit growth rate in services.

Is Apple stock a buy, sell or hold?

It was a rough start to the year for Apple, but shares turned a corner in early May after the company unveiled a massive stock buyback program. Since May 1, AAPL is up nearly 32%, adding to its impressive long-term return.

Unsurprisingly, Wall Street is bullish on the blue chip stock. According to S&P Global Market Intelligence, the average analyst target price for AAPL stock is $231.32, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm Needham is one of those with a Buy rating on AAPL stock.

"We argue that the best way to think about AAPL's valuation, pricing power, competitive advantage period, and barriers to entry is through the lens of AAPL's installed base of more than 1.25 billion of the wealthiest consumers in the world using more than 2.2 billion active devices an average of 5 hours per day," said Needham analyst Laura Martin said in a note this morning.

"We believe AAPL's goal is to grow long-term volume through increasing the average revenue per user and lowering churn levels by up-selling its users into additional devices and services," Martin adds

Needham has a $260 price target, which sits more than 16% above where Apple is currently trading.

TOPICS

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.