FILE - In this Aug. 25, 2011 file photo, an Apple employee walks between Apple buildings at Apple headquarters in Cupertino, Calif. (Paul Sakuma/AP photo)
CUPERTINO -- Apple stock hopped Wednesday after the tech giant announced record profit and revenue in the holiday-shopping quarter, nearing the company's all-time high as analysts predicted more growth to come.
Apple shares gained 5.7 percent to $115.31 and moved as high as $118.12 Wednesday, shy of the $119.75 record price set in November, when excitement about initial sales of the iPhone 6 and iPhone 6 Plus spurred investors. Those initial sales of Apple's newest smartphones led to a blockbuster quarter, with Apple announcing Tuesday that it sold a record 74.5 million iPhones in three months, leading to profit of $18 billion -- $3.06 a share -- and total sales of $74.6 billion.
While growth in iPhone sales was massive, with Apple's holiday-quarter sales increasing more than 46 percent from the same quarter a year ago, analysts wonder if the company will be able to repeat the performance this year after setting such a high bar.
"Now that consumers have these 'apparently amazing' iPhone 6/6+s, with better batteries and larger screens, this propensity to upgrade will probably be lower than it was in this past cycle," Berenberg analyst Adnaan Ahmad wrote in a note. "In our opinion, this is not good news for Apple's iPhone business."
Ahmad is the most bearish analyst on Wall Street in regard to Apple, however, with a "sell" rating and $60 price target that puts him far out of the mainstream, but colleagues from Pacific Crest Research and Nomura Equity Research expressed similar views.
Those views appeared to be in the minority, however, as most analysts praised Apple and predicted more huge quarters to come.
BTIG analyst Walter Piecyk emphatically stated in a blog post Wednesday that Apple will be able to sell more iPhones in 2015, which means the stock is not accounting for any earnings growth from new products such as the Apple Watch, which CEO Tim Cook said will debut in April.
"Apple can deliver on strong revenue and EPS growth in 2015 and the stock valuation does not adequately reflect that," Piecyk wrote, later adding, "Apple's current stock price (even after rising more than 5 percent after the close) is substantiated by the growth potential of its existing products with a free look on the growth potential of new product categories."
Citigroup analyst Jim Suva pointed out that changes in wireless plans are allowing consumers to upgrade their smartphones without waiting two years to avoid penalties, which he called a big factor in Apple's sales total and a continuing plus for the stock.
"We believe investors do not fully grasp this change in behavior by the wireless carriers and the positive impact to Apple," Suva wrote.
Another factor cited as a positive for Apple is the large pile of cash the company is pushing back to shareholders. Apple said in its report that it spent $5 billion on its own stock in the fourth quarter and paid $2.8 billion in dividends, part of a plan to return $130 billion to shareholders that is nearing completion.
"We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months," Chief Financial Officer Luca Maestri said in a prepared statement Tuesday.
Analysts believe Apple will increase the total it plans to return to shareholders because of the massive amounts of cash it continues to collect, however.
Apple "will announce an update to the program in April and we think that it will raise its capital return program further still," FBN Securities analyst Shebly Seyrafi wrote, while RBC Capital Markets analysts predicted Apple would increase the program to $200 billion.
Apple's massive repurchase plan is decreasing the number of shares on the open market, which is likely to keep its world's-best market capitalization -- the total value of all its shares -- from setting records even if its stock price reaches a new mark. Apple reported a share count slightly lower than 5.9 million Tuesday, after having 6.3 million shares available at the same time last year, giving it a market cap of $678.2 billion at the close of trading.
Contact Jeremy C. Owens at 408-920-5876; follow him at http://ift.tt/1drGiGq.
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