Reuters
Apple CEO Tim Cook.
- Wall Street analysts were reacting to Apple's quarterly earnings results on Wednesday.
- On Tuesday, fiscal first-quarter earnings and revenue both came in barely above analysts' estimates, and essentially in line with Apple's preannouncement earlier this month.
- Some said the iPhone's giant's guidance wasn't as grim as expected, but a host of challenges - namely around slowing economic growth in China and slowing iPhone sales - would persist.
- Shares were trading up 5% following the results.
- Watch Apple trade live.
Wall Street analysts mostly agreed on one thing following Apple's quarterly earnings report: the outlook wasn't as dire as what the consensus expected, but plenty of challenges lie ahead.
Apple reported fiscal first-quarter earnings Tuesday afternoon that were in line with what the company announced earlier this month, and barely above what most analysts were expecting. As for Apple's second-quarter guidance, its sales and earnings forecasts came in toward the low end of what analysts anticipated. Still, shares surged 5% after the results were released Tuesday evening, and held those gains early Wednesday.
Read more: The most important things we learned from Apple's earnings call
There were little to no surprises in the earnings results, analysts said, due to the surprise announcement already made in early January. For one analyst, KeyBanc Capital Markets' Andy Hargreaves said the company's outlook wasn't dismal, but still wasn't "particularly good." HSBC called the first quarter "uneventful," but noted second-quarter guidance fell below what the majority was expecting.
Hargreaves noted that Apple's services growth - seen as a burgeoning opportunity for the company as hardware sales slow - was "solid," but easing as well. Hargreaves left both his price target and investment recommendation on the stock unchanged, as did many of his peers in the analyst community.
Many pointed specifically to China and iPhone sales growth as specific headwinds for the company. Oppenheimer analyst Andrew Uerkwitz told clients that in the long run he saw the least upside from service sales in Greater China due in part to robust competition from Android phones and the impact of government regulations on services.
"We believe there is a lengthening of the replacement cycle and diminishing utility of high end phones across markets, to which Apple is not immune," he said. "As long as iPhone sales do not grow, we believe the stock will struggle to work. Longer term, we see tremendous value in the Apple ecosystem and its ability to monetize its user base."
Here's a snapshot of what other analysts are saying about Apple's results: