Analyst Note
| Abhinav Davuluri, CFA |Apple reported fiscal third-quarter results ahead of our expectations led by Mac and iPad segments. The firm did not provide guidance last quarter and once more refrained from offering guidance due to uncertainty regarding the coronavirus. CEO Tim Cook noted weak sales in April were offset by better-than-expected demand in May and June led by the cheaper iPhone SE launch, continued economic stimulus in many regions, and the lifting of some shelter-in-place restrictions around the world. Management confirmed that supply of the upcoming iPhones will be available in October rather than September. We are raising our fair value estimate for narrow-moat Apple to $285 per share from $240 as we incorporate a stronger near-term outlook for the Mac and iPad segments due to the ongoing work- and learning-from-home dynamics as well as increased expectations for the upcoming 5G iPhone. Nonetheless, given the 70% appreciation of shares from mid-March lows, we recommend prospective investors wait for a wider margin of safety given the precarious state of the global economy.