By Philip Elmer-DeWitt
October 21, 2014

Katy Huberty, Morgan Stanley: iPhone 6 Dials Up Profits. “Apple characterized iPhone 6 demand as “staggering” and “markedly higher in every single country.” Our checks suggest early supply constraints have been addressed, but with Apple expanding from 32 countries today to more than 115 by December quarter- end, we see the potential for meaningful channel inventory build in March, which could drive better than normal seasonality. What’s more, consensus estimates only assume half of the 250M iPhone 4s and older devices still in use will be upgraded this year, leaving considerable pent-up demand in FY16. If Apple Pay or Apple Watch gain traction, we see further iPhone upgrade potential in FY15 and FY16.” Rating: Overweight. Price target: $115.

Gene Munster, Piper Jaffray: Positive Dec Guide Suggests Product Theme Intact. “Based on Sep-14 iPhone units and margin combined with Dec-14 guidance, we believe that iPhone 6 is off to a fast start, meeting investor expectations. We believe the Dec-14 guidance would have been 1-2% better excluding the impact of FX. We believe investors will likely focus on an expected increase in gross margin sequentially in the December quarter. We expect gross margins in March to be flattish vs. December. We remain positive on shares of AAPL based on our belief that the tailwind from the iPhone 6 cycle carries into the March quarter along with investors shifting from a generally indifferent opinion on Apple Watch to a more optimistic outlook.” Overweight. $120.

Sherri Scribner, Deutsche Bank: Even Granny Smith bought an iPhone. “Phone units increased 16% Y/Y to 39.3M driven by strong demand for the new iPhone 6 and 6 Plus, while unit sell through was even stronger at +26% Y/Y. iPhone revenue was also strong, up 21% Y/Y, driven by higher ASPs of $603. Mgmt indicated that supply constraints remain a gating factor for iPhone sales, indicating that it is currently hard to know when supply and demand will balance. Mac units also saw upside in the Q, increasing 21% Y/Y to 5.5M, with sales increasing 18% Y/Y. While most segments were a positive, iPad shipments of 12.3M were down 13% Y/Y and missed expectations, driven by a pause in front of the October product refresh and a draw down in inventory.” Hold. $102.

Bill Choi, Janney: Big Phones, Big Beat and Raise. “Strong results are driven by the iPhone product cycle, as demand continues to outstrip supply and more than offset mild weakness in iPad. Management expects a strong ramp in the December quarter, as the newest iPhones just launched in China to record orders. Pay launched earlier in the day; we’re expecting only modest revenue from it and Watch. Buy. Raised fair value to $117 from $110.

Andrew Uerkwitz, Oppenheimer: High Expectations Met. “After delivering two well-executed product launches for consumers, Apple delivered for investors: Apple F4Q14 revenues/diluted GAAP EPS of $42.1B/$1.42 vs. our $42.3B/$1.40E and consensus of $40.0B/$1.31E. The results were driven by stronger-than-expected iPhone and Mac sales. iPhone 6 and 6 Plus supply has been the strongest in iPhone history but are still in shortage thus far, while Mac NB saw strength during “back-to-school” sales and in international markets. We raise our FY15E revenues/EPS slightly from $208.1B/$7.31 to $208.7B/$7.36.” Outperform. $115.

Colin Gillis, BBC: Haiku: The smartphone market, could converge to the growth rate, of the phone market. “Apple’s current dependence on iPhone hardware sales may be a looming headwind. The market dynamics for smartphone growth is slowing and may converge to the 5% growth rates of the overall mobile phone market. For us to turn more positive on Apple shares we prefer to see a stronger recurring revenue stream with a monthly component coming from streaming music and movie, payments and advertising. We understand the company is positioning for these markets, and it remains to be seen if Apple can build up a robust service layer before the smartphone product cycle elongates.” Hold. $103.

Shelby Seyrafi, FBN: Strong iPhone Sales helped by iPhone 6 Drive Strong Quarter & Guide. “The company reported a nice revenue and EPS beat driven by strength in iPhone shipments (39.3M, up 16% Y/Y and 5% above consensus) driven by strong initial shipments of the iPhone 6/6+ (which became available in many countries including the US on Sept. 19) and by better than expected MAC and iPod results offset by weaker than expected shipments of iPads in front of its recent release of iPad products (iPad Air 2 and iPad mini 3). GM of 38.0% came in line with consensus (38%) and guidance (37-38%) but R&D came in below our expectations, allowing the company to beat on operating margin (26.5% vs. 26.0% consensus). Revenue growth of 12.4% Y/Y is an improvement from single digit Y/Y growth rates over the past five quarters, and growth was in the double-digits even adjusting for channel-fill.” Outperform. $130.

Walter Piecyk, BTIG: Increasing Apple Target on Higher Growth Estimates. “Strong unit growth in iPhones is being further levered by a rise in iPhone ASPs, which rose for the first time y/y since the iPhone 4S launched in 2011. The strength in iPhone and Macs more than offset the stagnation in iPads, where little evidence was provided by management about whether that segment can return to growth. Ultimately the December quarter will hinge on how many iPhones Apple can make as Tim Cook gave no indication of when supply and demand balance would be reached noting, ‘We are selling everything we can make.'” Buy. Raised target to $128 from $112.

Sundeep Bajikar, Jefferies: Big iPhone Product Cycle. “Strong results and guidance confirm Apple is benefiting from an iPhone super cycle, and we continue to expect Street estimates to move higher. We see limited upside to the stock near term, and continue to expect the longer-term investment debate to shift toward Apple’s ability to grow and monetize its iOS ecosystem at lower hardware price points.” Hold. Raised target to $112 from $110.

Kulbinder Garcha, Credit Suisse: iPhone ramp underway. “Going forward management noted that the iPhone 6/6 Plus had driven meaningful growth in all countries where it had been launched. We believe there is significant backlog and the real issue is supply. We now project volumes of 61mn/193mn /194mn units in the December quarter, FY15, and FY16, respectively.” Neutral. $110.

Timothy Arcuri, Cowen: Bono Might Be Sorry, But 6/6+ Still Provides The Edge. “Strong results/EPS guide (implied) a little above Street was great, but also largely expected. More importantly, China sell-through commentary was very bullish while supply constraints and a desire to grow channel inventories adds, we think, ~10MM unit tailwind to 1H:15. Lastly, Apple Pay + Watch add new angles/use cases, but it is still all about selling more hardware.” Outperform. Raised target to $113 from $110.

Rod Hall, J.P. Morgan. Mac momentum continues. “Mac shipments at 5.5m (+21% Y/Y) beat our 4.8m estimate by 15%. Mac sales in EMs grew by 46% Y/Y. We believe the main driver of this was Apple’s recent reduction in Macbook Air pricing. In our opinion this underscores high price elasticity in the <$1,000 laptop market which we continue to see as a major opportunity for Apple.” Overweight. $112.

Avi Silver, CLSA: Is Apple less bullish on its Watch prospects? “The launch of the Watch and the attention-grabbing headlines at fashion shows and in press interviews suggests this is a key category launch that only occurs every three to four years for Apple. Despite this, Apple will not be creating its own revenue category and will instead bundle it into the Other Revenue line that will include Accessories and Apple TV going forward. A bigger statement would be to break it out and signal confidence that the product will be a hit. We still believe this product will be successful, but would prefer to see a stronger vote of confidence from Apple by committing to report the details. Apple’s argument that it is a small revenue category seems inconsistent with historical disclosure on smaller volumes for iPhone in 2007 and iPad in 2010.” Buy. $123.

Abhey Lamba, Mizuho: Significant Acceleration in iPhone Sales Could Offer Upside to Estimates. “The launch of iPhone 6/6+ clearly helped segment revenues and margins, which we expect will continue over the next few quarters. Management’s F1Q15 guidance is likely based on 60-63mm iPhone units, which could have upside as supply-side checks indicate Apple can ship 65-70mm phones. New product categories have yet to materialize in results but would be additional upside.” Buy. Target raised to $115 from $110.

Amit Daryanani, RBC: Impressive Print & Guide Driven By iPhone 6. “AAPL has seen gross-margins at or above the high-end of their guide for 6-quarters in a row. We think the magnitude of upside in Dec-qtr will be contingent on mix, f/x and improved yields of iPhone 6/6+ as demand continues to outpace supply (lead-times for both phones are unchanged since launch). The one blemish on the results is the disappointing iPad units that we think could see a cyclical bounce post product refresh.” Outperform. Raised price target to $115 from $114.

Rob Cihra, Evercore: Bigger than just a cycle. “Looking past the blowout, we still think a re-accelerated top-line argues for a higher multiple. Given big upside strength of this iPhone cycle we expect some investors naturally start worrying about “then what?” Indeed, a Dec-qtr blowout just means tougher Dec-15 comps and we do model iPhone unit growth moderating off that peak. But we also still see Apple’s revs growth rate re-accelerating in FY15 to +15%Y/ Y vs. FY14’s +7%Y/Y… and forecast FY16 revs another +5%Y/ Y. Although Apple is a product company with a transactional business model, we believe its extremely loyal user base in a closed-loop platform has ultimately proved it can also drive what ends up looking more like a recurring model over time. Buy. $125.

Toni Sacconaghi, Bernstein Research: All Good as the iPhone 6 SuperCycle Unfolds… Risks = Expectations, FY16 Replacement Cycle Snapback. “iPhone has stunningly contributed ~ 90% of revenue growth over the last 12 months. While we expect a very robust iPhone 6 product cycle, buoyed by share gains and an accelerated replacement cycle, we worry that the flip side of an accelerated iPhone replacement cycle in FY15 is that the cycle may revert “back to normal”, potentially pressuring unit sales in FY 16. With iPad, iPod and iTunes revenue declining, and Mac, the App Store and Software/Services relatively small, Apple’s growth over the last twelve months has been dominated by the iPhone. (Exhibit 10). With the narrowness of Apple’s growth drivers and the risk of longer replacement cycles in mature markets over time, we worry that Apple could see increasing revenue pressure in mature markets that will be hard for other markets to overcome.” Outperform. Raised target to $110 from $108.

Stephen Turner, Hilliard Lyons: Financial Management. “Apple generated operating cash flow of $13.25 billion and free cash flow of $9.4 billion. Net cash & investments totaled $120 billion or ~$20 per share. Share count was reduced by 6.2% y/y, as the company returned $20 billion to shareholders during the quarter.” Buy. Raised target to $137 from $124.

Bill Shope, Goldman Sachs: “This was a strong set of results as Apple delivered a clean beat both for the September quarter and December guidance. Importantly, gross margins were in-line to modestly better than expected, which we think should serve to offset a key bear concern on margin pressure from the new product ramp.” Buy. Raised target to $124 from $113.

Brian White, Cantor Fitzgerald: “In our view, innovation is alive and well in Cupertino and we believe this “super cycle” is just getting started […] With Apple trading at just 10.3x our CY:15 EPS estimate (ex- cash), we believe the market needs to start thinking more boldly about Apple and appreciate the company’s opportunity to reinvent new product categories for years to come […] We believe the partnership with IBM will open up new opportunities for the iPad in the enterprise market and ultimately we expect Apple to launch a larger-sized iPad (i.e., 12.9-inch iPad) that we have discussed as the ‘iPad Pro’.” Buy. Raises target to $143 from $123.

Mike Walkley, Canaccord Genuity: “We believe Apple’s Q1/’15 sales guidance in the range of $63.5-66.5B was adversely impacted by F/X from the stronger dollar and iPhone demand well above Apple’s ability to supply throughout the December quarter. Our updated estimates are at the high-end of Apple’s guidance due to our surveys indicating an increasing sales mix of higher-ASP 64GB (versus 16GB) iPhone 6/6 Plus SKUs combined with a growing demand for the higher-ASP iPhone 6 Plus, particularly in China. We anticipate materially higher iPhone ASPs during Q1/F’15 and maintain above-consensus iPhone ASP of $680 adjusting for deferred revenue. Given the strong results and guidance, we maintain our bullish F2015 product cycle thesis.” Buy. Raises target to $120 from $115.

Tavis McCourt, Raymond James: Outperform. “Supply/demand imbalance bodes well for March seasonality: “Not on the same planet” is how Tim Cook described today’s iPhone supply/demand balance. At this point, the company is selling everything it can make, and it is unlikely it will be able to fill channel inventories to optimal levels by the end of the quarter. This should make for a less seasonal March quarter than typical.” $110.

Stuart Jeffrey, Nomura Equity Research: “We continue to believe that demand for $450 and higher smartphones is finite and already close to saturation. Current strength in iPhone 6 sales are thus likely caused by an accelerated replacement cycle (both deferred and brought forward purchases) driven by the devices’ bigger screens. With 5s launch sales just 7% higher than those of the 5, innovation likely to prove limited with the ‘s’ release cycle and the impact of a premium device launch (6plus) factored into year-on-year numbers, the scope for material growth in 12 months time appears limited to us. Despite this, management’s target to boost channel inventory levels provides some support for FY15 growth. The iPhone 6 plus share of sales may yet surprise (boosting ASPs), and management also has the flexibility to announce a bigger-than-expected extension to the share buy-back plan should growth in net-income disappoint.” Neutral. $104.

Adnaan Ahmad, Berenberg: “Our take here is that Apple has costs under better control in this cycle relative to previous ones and this shows as the cost per GB essentially doubled as Apple took away the 32GB option. In addition, we think that CEO Tim Cook has paid a lot of attention to gross margin development as he knows that this is critical for investors. In other words, the iPhone 6 versus other iPhones (in an extreme) has probably been designed with the share price in mind […] Given the euphoria around upgrading to the 6 (among new and existing users), the concern we have is that future demand may have been pulled forward. What will the iPhone 7 have to differentiate it, a six-inch screen? A curved/flexi screen? In other words, this is the “once in a lifetime” upgrade/catch-up cycle. Beyond that, as with Samsung, what is the hardware innovation that differentiates? Foldable? If this thought process plays out as we think it may, 2015 is going to be an amazing year for Apple earnings, but there is a risk that 2016 will see a deceleration. And earnings deceleration for a well-loved/well-owned/heavily-hyped stock is never a good thing in our view. Sell. $60.

Thanks to Barrons’ Tiernan Ray for the last six.

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at fortune.com/ped or subscribe via his RSS feed.

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