Third Quarter Earnings: The Analysts Speak

Posted by: Arik Hesseldahl on July 22

It’s the day after Apple’s third quarter earnings, and as of 8:45 EDT this morning the stock’s futures are down $15, suggesting a nasty day when the regular session gets underway. The main concern will be the warning over gross margins in Apple’s fourth fiscal quarter ending in September and into fiscal 2009. And there are also persistent worries, which I think are overblown, about the health of CEO Steve Jobs.

Analyst reports are coming out fast and furious and I thought I’d summarize them as they cross my desk.

Gene Munster, Piper Jaffrary: “While the focus today will be anxiety over gross margin, we expect by the end of the September quarter the Street will likely look past margin guidance and focus on product transitions, along with the positive impact these products will have on revenue growth.” Munster maintained a Buy rating with a price target of $250.

David Bailey, Goldman Sachs: Bailey lowered his price target on Apple from $220 to $200, but maintained a Buy rating.

Shannon Cross, Soleil Cross Research: The guidance creates a buying opportunity. She maintains a Buy rating with a price target of $200.

Andy Hargreaves, Pacific Crest Securities: The company is in the early stages of two powerful product cycles. Yet concerns about Jobs’ health will continue to weigh on the stock. Even so he’s bullish. “We believe Apple’s product diversity, its broad distribution and partner ecosystems, and its deep bench of management talent position it to continue its current momentum, even if concerns about Mr. Jobs’ health prove to be well-founded.” He maintains an “outperform” rating with a price target of $235.

Tim Luke at Lehman Brothers: Gross margin guidance will prove conservative. Product expansion plans are on track. Price target lowered from $234 to $220. Rating stays at “overweight” given the weakness in the price.

Inrigd Ebeling, JMP Securities: Lower than expected guidance creates a good buying opportunity.

Yair Reiner, Oppenheimer & Co.: Q3 report was solid, but gross margin guidance for 2009 is disappointing. Expects sales of 4.9 million iPhones in Q4. Would buy on the weakness.

Scott Craig, Bank of America Securities: Management is being conservative about margin guidance. Price target lowered to $180 from $190. Maintaining a Buy Rating.

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