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Apple’s record fourth quarter: What the analysts are saying (updated)

Unboxing Apple Inc. iPhone 6sUnboxing Apple Inc. iPhone 6s
The iPhone 6sPhotograph by Xaume Olleros — Bloomberg via Getty Images

Here are excerpts from the notes we’ve seen.

Anil Doradla, Blair. Not a Blowout Quarter but Clearly Moving in the Right Direction. While Apple’s (AAPL) September-quarter results did not blow out Street expectations, they were nevertheless solid, with moderate upside to our and consensus estimates, and were good enough to remain bullish on the story. Outperform.

Daniel Ives, FBR: Better-Than-Feared Results. With Cook & Co. forecasting year-over-year iPhone unit growth off Herculean comps in the December quarter with China remaining white hot, we believe last night was a major step in turning the positive tide around the Apple story. While there will continue to be worries around FY16 growth during this 6s product cycle as the “iPhone 6 hangover” thesis remains a lingering cloud over Cupertino’s head, we believe this quarter and guidance proves yet again how much fuel is left in the iPhone engine. Outperform. $175.

Tony Arcuri, Cowan: Beat/Raise Has Given Way To Holding Pattern. While headline guidance was down the middle of the fairway, CQ4 iPhone units still look to be a little better (78-79MM) when adjusting for AAPL’s recent history of beats on both revs/EPS. More importantly, we feel good about our downgrade off last Q’s earnings as “beat/raise” has broadly given way to more of a “holding pattern” while new products/services gestate. Market perform. $135.

Andy Hargreaves, Pacific Crest: Long-Term Value Offsets Remaining Near-Term Risk. Expectations for the 6s cycle have fallen and we see March as the low point for growth. Longer term, Apple is gaining share and retains extraordinary pricing power, which should support stock appreciation as F2016 progresses. We recommend buying AAPL. Raising rating to Overweight from Sector weight. Establishing price target of $142.

Sherri Scribner, Deutsche Bank: Some sweet apples, some sour apples. Gross margins were a bright spot, but reflect accounting changes and GM will be under more pressure as we move through FY-16 as hedges roll off. We continue to believe that current valuations are fair and reflect the uncertainty around AAPL’s ability to grow next year. We expect shares to be range bound over the next few quarters given limited catalysts. Hold. $125.

Gene Munster, Piper Jaffray: Share Gains Drive Outlook For Modest iPhone Growth. Apple guided Dec-15 revenue to $75.5-77.5 billion vs. the Street’s $76.8 billion and our expectation for guidance of $74-77 billion. CEO Tim Cook commented on the earnings call to expect iPhone units up y/y in December. We view this as a relief given investors were bracing for the start of the 6S cycle to be down meaningfully (down 5-8% y/y). Overweight. Raising price target to $179 from $172.

Walter Piecyk, BTIG: Apple Growth Story Intact. Over the past week, the commentary from U.S. operators about declining phone upgrade rates was starting to concern us, but apparently China continues to chug along unabated, with mainland units growing 120% during the quarter. As we learn more about phone upgrade programs, we agree with management’s assessment that the benefit might actually be larger in future years than what they are seeing now. Buy. $160.

Katy Huberty, Morgan Stanley: iPhone remains the name of the earnings game. December quarter guidance implies iPhone unit and revenue growth on the back of 1) strength in emerging markets, including China, 2) continued upgrade cycle, with 69% of users yet to upgrade to larger screens, 3) record Android share gains, and 4) ASP uplift. Each of these factors should continue as iOS takes share in a maturing smartphone market. Our data also indicate Chinese users shifting to better smartphones and more U.S. users plan to upgrade this year than last year. As a result, Apple is expected to take record share in 2016. Overweight; Best Idea. $152.

Alex Gauna, JMP: Share Gains and New Markets Drive Ongoing Outperformance. We are impressed with the result given the current macroeconomic backdrop and strength of the U.S. dollar, and particularly with the 99% y/y growth the company was able to deliver from sales into Greater China, and we continue to recommend buying the stock while it handily outgrows the global pace of economic expansion but remains at an attractive discount to the S&P 500 mean market multiple. Market outperform. Raising price target to $165 from $160.

Kulbinder Garcha, Credit Suisse. Signs for Growth Exist. Given significant concerns around the sustainability of Apple’s growth, we believe the results were reassuring. With high retention rates, a superior ecosystem, and multi-product compute advantage, we believe such elevated level of earnings and FCF of around $60bn per annum should be sustainable long term. Outperform. Lowering target price to $140 from $145.

Andrew Uerkwitz, Oppenheimer: What Doubling Sales in Greater China Means for Apple. Apple’s 99% Y/Y sales growth in China and strong momentum in software/service revenues prove again that the company is competing at a different level from its competitors across product categories. We expect users from other computing platforms to continue to switch over, as iOS offers ever growing ecosystem advantages and superior user experience. Outperform. $155.

Ben Schachter, Macquarie: The bottom line. Phone and China growth were the key positives, as each drove outperformance. However, growth will slow as the law of large numbers hits in December. The big question going into the call was can iPhone grow in Dec and beyond. The answer, at least for December, is yes, as AAPL stated that iPhone will grow in units and dollars in the December quarter. We view this as a remarkable achievement given the success of iPhone 6 last year. Now, all eyes will turn to calendar ’16 and the long wait until iPhone 7. Outperform. Valuation: $133.

Shebly Seyrafi, FBN: Implied FQ1 iPhone Units ~80M. The key metric that investors were anxiously awaiting is the implied iPhone unit shipment estimate for FQ1/Dec. as AAPL is facing its first difficult comp since the iPhone 6 was launched last year. Taking the company’s FQ1 revenue guidance of $75.5-$77.5B and assuming that iPad and iPod units continue to decline aggressively, we estimate that AAPL will ship 79.5M iPhones in FQ1, up 7% Y/Y. Outperform, $150.

Ananda Baruah, Brean Capital: Dec Q Rev Guide To Suggest Mid-70M Phones. That said, we believe the next true elongated stock “move” will be determined by what CY16 iPhone ships can look like, and the Street likely won’t have a view on that until April when AAPL reports the Mar Q. We continue to believe that Street numbers are materially low through ’17. Buy. $170.

James Cordwell, Atlantic Equities: Reassuring outlook, attractive valuation. Reassuringly Q1 guidance bracketed consensus, and though it will likely not fully put to rest the bear case that Apple will face declines in FY16, it makes the risk-reward increasingly compelling in our view given a low valuation, continued secular growth in China and the potential for the iPhone 7 cycle to reaccelerate growth. Overweight. $150.

Aaron Rakers, Stifel: Positive Results/Outlook Amidst a Lot of Supply-Chain/Macro Concern. While concern over slowing/negative iPhone growth is likely to remain a topic of much debate (e.g., focus on inventory replenishment vs. sell-thru now in focus for F1Q16), we believe Apple’s results and outlook should be viewed positively—especially with Apple shares trading at ~8.3x ex-cash on our F2017 EPS estimate. Buy. $150.

William Power, Baird. Remain buyers. Yesterday after the close, Apple reported solid FQ4 results, with Q1 guidance roughly in line with prior consensus. Consistent with our prior forecasts, management expects iPhone units to grow YOY in FQ1, which should allay some concerns on that front. Additionally, growth in China, another investor concern, remains robust. We remain positive on the near- and long-term opportunity for Apple. Outperform. $155.

Mark Moscowitz, Barclays: What to do with the stock? Accumulate: Add or build positions in shares of Apple. The model sits on the right side of what we call the Triple Divide. While tough Y/Y iPhone compares still could make for an air pocket or two in 1H C2016, we are modestly lifting our growth estimates due to 1) sturdy ASPs, 2) accelerating converts, 3) potential of shortening replacement cycles with the advent of upgrade programs, and 4) more favorable mix due to increasing effects of services. Overweight; Top Pick. Raising price target to $155 from $150.

Amit Daryanani, RBC: iPhone Growth Sustains Despite All The Worries. We think there are several tailwinds that should benefit AAPL across both revenues and EPS – 1) ~1/3 of the install base has migrated to the 6 product line, 2) Android switch rate at 30% suggests further gains likely, 3) tailwinds in China from LTE expansion and further uptake of AAPL products, 4) ASP’s should sustainably ramp higher given memory uptake and 5) gross-margins could see upside given leverage and cycle efficiency. Outperform. $150.

Keith Bachman, BMO: More Runway With Installed Base. We had projected that Apple would have an in-line Q with potential weakness in the rev guide. Specifically, we had suggested that December Q rev guidance at the midpoint could be ~2% lower than consensus. Instead, Apple’s guide was only about 80 bps lower than consensus at the midpoint. Against a wall of worrycreated by the supply chain, we think Apple’s rev guide is a source of relief. Outperform. $145.

T. Michael Walkley, Canaccord: iPhone 6 and 6S product cycle have long tails. We believe the current iPhone 6 and iPhone 6s should continue to post strong sales and high-end smartphone market share gains, as we believe only 31% of the installed iPhone user base has upgraded to the iPhone 6/ 6S smartphones and Apple continues to take premium tier market share with Android users switching to the iPhone. Buy. $160.

Robert Cihra, Sterne Agee: Buy AAPL stock and not its supply-chain, as we believe investor fears about iPhone comps continue to offer compelling 40% upside… Ironically, it wasn’t too long ago that bears cited China as a risk for Apple, where its high-priced products were apparently never going to sell. Buy. Raising price target to $160.

Maynard Um, Wells Fargo: The Good. 1) iPhone sales of $32.2B exceed our $31.6B (Street $31.4B) on stronger ASPs of $670 (our/Street: $645/$649), 2) iPhone channel inventory was below target range, which should help the Dec/Mar quarters, 3) iPad channel inventory also fell below target range, 4) Gross margin of 39.9% was above our/Street’s 39.7%/39.3%, 5) Watch units increased sequentially, 6) FQ4 EPS of $1.96 was above our/Street’s $1.95/$1.88, 7) implied F16 EPS of $3.08-$3.29 vs. our $3.15 and Street’s $3.22. The Bad. 1) iPhone units of 48.0MM was below Street’s 48.1MM and our 49.0MM, 2) opex of $5.9B higher than our $5.8B, 3) iPad units/sales of $4.3B/9.9M continued to miss (Street: $4.4B/10.5MM, WF: $5.7B/10.9MM), 4) gross margin guide of 39.0%-40.0% at the mid-pt was below our 40.1% and Street’s $39.8%, including the 30bps benefit from adding back $5-$10 per iOS device related to future software upgrade rights. Outperform. Valuation: $125-135.

Abhey Lamba, Mizuho: Tough Compares Likely to Impact Stock Performance. Apple reported F4Q15 results ahead of consensus, but performance was largely inline with buy-side expectations. Revenues were slightly ahead while EPS benefited from better margins. iPhone shipments were inline with estimates of 48mm but ASP of $670 was significantly higher. F1Q16 guidance was inline as well. Although the company continues to perform well, we think stock performance remains tied to iPhone shipments, which face tough compares over the next couple of quarters making it difficult for the stock to work. Neutral. $125.

Neil Cybart, Above Avalon: iPhone Upgrade Program: A Big Deal. Apple’s iPhone Upgrade Program and the much broader topic of new annual iPhone upgrade plans were the highlight of the call. While analysts were trying to get clues from Cook in terms of iPhone unit sales growth through 2016, these new upgrade programs represent one of the more important long-term sales trends for iPhone. At a minimum, it will take a year to see the first impact from users upgrading to a new iPhone every year.

Ben Bajarin, Creative Strategies: Underestimating the iPhone. The smartphone market is a big one. The biggest market of any consumer tech product. It’s the only product almost every adult will own some day. Apple’s share of smartphone sales for the calendar Q3 2015 quarter was 14.5%. The dynamics of the global smartphone market are hard to read for many but have been clear to me for some time. As markets mature, consumers start becoming more refined in their needs, wants, and desires with a smartphone. This simple dynamic is what led Apple to have the highest number of consumers upgrade their smartphone to an iPhone from an Android phone.

Colin Gillis, BGC: Haiku: The results have both, metrics for the bull and bear, we call it a push. Apple shares have been stuck in a range over the last three months, and we see the risk skewed to the downside with difficult comparisons coming in the December and March quarter. We mention this in the context that Apple has been depleting its domestic cash balance by aggressively returning cash to shareholders, completing over $143 billion of its $200 billion plan, including repurchasing 122 million shares of stock worth $14 billion in the September quarter. Domestic cash is at $18.7 billion, just 9% of total and the lowest level of the fiscal year. Hold. $115.

Horace Dediu, Asymco: Wall Street was having a huge Apple shares “Everything Must Go” sale and Apple was there, $14 billion cash in hand. Long term shareholders will be rewarded. Quarters are not important.

Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at fortune.com/ped or subscribe via his RSS feed. You might also want to subscribe to Data Sheet, Fortune’s daily newsletter on the business of technology.

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