After a disastrous nine day fall, Apple shares surged more than a 9% in premarket trading on Wednesday after overwhelming quarterly results exceeded expectations of Wall Street analysts. These more than satisfactory results were due to the sheer volume of iPhone sales in the greater China region. Apple, the world’s leading technology company announced that its second quarter profit had almost doubled, thus allaying all fears that the company is past its peak. An analyst at Goldman Sachs predicted that the share could well be touching the $850 mark, as profits continue to rise.
Even operating margins hit an all new high after registering a 39.3% increase, a new record. Low commodity costs helped gross margins reach 47.4%, a 6% rise from last year. There is however a fear that margins may suffer in case Apple decides to sell older models in order to ward off competition from cheaper Android phones. This could lead to a possible decrease in the number of units sold. The remarkable sales numbers of Apple this quarter will increase its share in the smartphone market to a whopping 24%. However, things don’t seem all that easy for Apple as there are reports which suggest a possible meltdown in the number of sales as people prepare for the release of the much anticipated iPhone 5. This may lead to Apple losing share in the summer.
Despite these rumours, there are many market research firms that are predicting a gradual increase in its share price in years to come. Analysts at popular research firms like Canaccord Genuity, RBC capital markets, Goldman, Citigroup and many more are all predicting a bullish future for Apple this year. Apple sold over 35.1 million iPhones that accounted for more than half its revenue this quarter. Apple has achieved the unthinkable in terms of securing market share and growth, but the road ahead is surely going to be difficult for Apple courtesy of the competition that Android poses.
Thomas Reuters StarMine, a well known research firm stated that there were 22 analysts who were in favour of purchasing the stock. Seven other analysts asserted that this is a good time to hold and only one other recommended selling the stock, predicting a meltdown in the summer. Most analysts predicted a mean price of $680 for the stock. The stock ended the day on a bullish note with a $51 rise.
