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Are analysts still optimistic about Apple?

Jan 18, 2013

Apple: Change in Q4 EPS Estimate and Price since Sep 30Apple is scheduled to report earnings for Q4 2012 on January 23. The mean EPS estimate for Apple is $13.45, which is nearly 14% below the mean EPS estimate of $15.62 at the start of the quarter (September 30). During the quarter, analysts reduced their earnings estimates for Apple. Most of this reduction occurred in late October, after the company issued EPS guidance below the expectations of analysts.

While the EPS estimates for Apple recorded a sharp decline in October, the price of the stock has witnessed a more gradual decrease. Since September 30, the price of the stock has fallen 24%. As a result of the reduction of the mean EPS estimate during the quarter, Apple is now projected to report a year-over year decline in EPS for the first time in over nine years. 

Although analysts reduced their fourth quarter EPS estimates for Apple, they did not make significant changes to their ratings over this time frame. In terms of target prices, analysts did lower their estimates in aggregate by about 8%. The mean target price for Apple is $729.84 today, compared to the mean target price of $792.40 back on September 30. However, it is important to note that the price of the stock has dropped by a much larger amount (-24%) over this same time frame.

Given the lack of substantial revisions to ratings and targets, Apple is currently ranked in the S&P 500:

  • #1 in terms of the highest number of Buy ratings
  • #10 in terms of the highest percentage of Buy ratings
  • #1 in terms of largest percentage upside difference between mean target price and closing price

Thus, despite analysts reducing their fourth quarter EPS estimates for Apple and the significant decrease in the price of the stock over the last few months, analysts still view Apple as one of the highest ranked stocks long-term in the entire S&P 500, based on their ratings and target prices for the company.

Read more about the projections for Apple in FactSet Market Insight. Visit www.factset.com/marketinsight to launch the full report. 

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