Apple’s 2Q Sales Pop 54% As Services and Mac Revenue Booms; Shares Gain After-Hours

Apple Inc. (AAPL) posted strong fiscal 2Q results (ended March 27) driven by new all-time high Services and Mac revenue along with outstanding iPhone sales. Shares of the tech giant increased 2.4% in Wednesday’s extended trading session.

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Apple’s 2Q earnings more than doubled to $1.40 per share on a year-over-year basis and outpaced Street estimates of $0.98 per share. Revenues jumped 54% to $89.6 billion and came in well ahead of analysts’ expectations of $77.01 billion.

Services revenue came in at $16.9 billion, up 27% year-over-year, while Mac revenue grew 68.5% to $9.1 billion. Additionally, iPhone sales of $47.9 billion surged 65.2% from the same quarter last year. Notably, Apple recorded strong growth in each of its geographic segments including the Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific.

Apple CEO Tim Cook said, “Apple is in a period of sweeping innovation across our product lineup, and we’re keeping focus on how we can help our teams and the communities where we work emerge from this pandemic into a better world. That certainly begins with products like the all-new iMac and iPad Pro, but it extends to efforts like the 8 gigawatts of new clean energy we’ll help bring onto the grid and our $430 billion investment in the United States over the next 5 years.” (See Apple stock analysis on TipRanks)

Additionally, Apple’s board of directors announced an increased quarterly cash dividend of $0.22 per share of the company’s common stock, up 7% from the prior payout. The new dividend will be paid on May 13 to shareholders of record as of May 10. The company’s annual dividend of $0.88 per share now reflects a dividend yield of 0.66%. The existing share repurchase program has also been authorized to increase by $90 billion.

Canaccord Genuity analyst Michael Walkley increased the stock’s price target to $165 (23.5% upside potential) from $155 and reiterated a Buy rating. “Based on the robust Q2/F21 results, stronger gross margin trends, and management’s commentary,” Walkley updated “C21/C22 EPS estimates from $4.41/$5.09 to $5.12/$5.49,” which resulted in an increased price target.

The analyst believes “Apple is well-positioned to continue to benefit from the 5G upgrade cycle and anticipate strong overall growth trends as 5G smartphones ramp and its installed base expands with higher-margins services revenue. Apple’s ecosystem approach, including an installed base that exceeds 1.65B devices globally and now over 1B iPhone users, should continue to generate strong services revenue.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 19 analysts suggesting a Buy, 3 analysts recommending a Hold, and 1 analyst suggesting a Sell. The average analyst price target of $153.42 implies 15% upside potential to current levels. Shares have jumped 85.7% over the past year.

Apple scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.