Apple blows past Q4 estimates as shares hit all time high

Apple, Inc. (NASDAQ: AAPL) reported its fourth quarter earnings for fiscal year 2017 and blew past analysts earnings as shares surged to an all time high. Shares were down after hitting an all time high in after hours on Thursday, but were still up 2.3 percent after Friday’s open.

For the third quarter, Apple reported revenue of $52.6 billion, 12 percent increase year over year, and topping Thomson Reuters analysts’ estimates of $50.7. The company reported an EPS of $2.07, 24 percent increase year over year, and beating Thomson Reuters analysts’ estimates of $1.87.

International revenue accounted for 62 percent of the company’s quarterly revenue. Europe revenue increased by 20 percent year over year, while Greater China revenue increased 12 percent year over year. U.S. revenue alone was $23.1 billion, increasing 14 percent year over year.

Apple sold more iPhones that analysts had expected which came as a surprise to both investors and the company itself, said chief executive, Tim Cook, on a conference call. Cook said that the iPhone 8 and iPhone 8 Plus became Apple’s top two selling products at launch despite having revealed that the iPhone X will launch shortly after the iPhone 8 series.

In the fourth quarter, the company had sold 46.7 million iPhones, just topping FactSet’s consensus of 46 million.

iPhone revenue only jumped a mere 2 percent year over year, but the surge in Mac and iPad sales significantly contributed to the strong quarter.

“We’re happy to report a very strong finish to a great fiscal 2017, with record fourth quarter revenue, year-over-year growth for all our product categories, and our best quarter ever for Services,” said Cook.

Now, as the iPhone X launches and shipping begins, investors and analysts now wait to see how sales will project for the new phone even though the iPhone 8 series revenue was larger than expected.

Although investors may seem cautious due to the fact that new Apple products have become more and more expensive each year, but it hasn’t stopped consumers from purchasing products. Apple reported gross margins of 37.9 percent during the quarter, falling short of the estimated 38 percent by Street Account, meaning Apple is selling products that are becoming more and more expensive to produce.

The sudden increase in prices for the iPhones as well other introducing new technology to other products all come as Apple is aiming for to become a trillion dollar, as the company already achieved a $900 billion market capitalization, making it the most valued public company.

Apple provides its first quarter guidance for fiscal year 2018. The company expects an even larger revenue than the fourth quarter expecting $84 billion to $87 billion, representing nearly a 39 percent increase quarter over quarter.

The company also expects operating costs to be between $7.65 billion to $7.75 billion, meaning, operating expenses will nearly increase $1 billion quarter over quarter. The company expects other income/expenses to fall down $600 million from fourth quarter’s $797 million.

As the fourth quarter results blow past analysts, they have now reevaluated their ratings for Apple.

Citigroup’s Jim Suva says the firm has now raised its price target to $200 from $170 and reiterating their buy rating. UBS’ Steven Milunovich increased the firm’s EPS estimate to $12.50 from $11.40 to $11.65. Data compiled by Bloomberg shows 36 buys, 7 holds, and no sell ratings on Apple with an average price target of $186.85.

Apple shares are now up 50 percent year to date.

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