January 25, 2012, 11:32 AM — To absolutely no one's surprise, Wall Street reacted to what one analyst described as Apple's "perfect quarter" by sending shares (NASDAQ: AAPL) to an all-time high in Wednesday trading.
Investor enthusiasm for Apple's stellar fiscal 2012 first quarter results propelled shares to as high as 454.45, more than 5 percent above the previous all-time high of 431.37 set last Thursday and 8.1% above Tuesday's closing price of 420.41.
Apple reported Q1 numbers after Tuesday's final bell that blew away analysts' expectations as well as the company's typically conservative guidance, prompting analyst Brian Marshall of International Strategy & Investment Group (ISI) to call it "the perfect quarter," according to Apple Insider.
Average analyst estimates for Q1 called for net income of $10.08 a share on revenue of $38.85 billion. But Apple made a mockery of those forecasts by more than doubling its earnings on the back of record iPhone and iPad sales.
Net income for the quarter ended December 31 was $13.1 billion, or $13.87 a share, 118% above net income of $6 billion, or $6.43 a share, in last year's first quarter. By the way, notice that earnings per share were $3.79 above analyst estimates. Stocks routinely get hammered for missing profit expectations by a couple of pennies.
Revenue increased 73% to $46.33 billion from $26.74 billion a year ago as Apple cashed in on strong demand for the iPhone 4S and the iPad 2. The company sold 37.04 million iPhones in Q1, up 128% from 16.24 million in last year's first quarter and well above analyst estimates that ranged from 25 million to 30 million units.
Sales of the iPad also more than doubled from the year-ago quarter, with 15.43 million of the market-leading tablet being sold, versus 7.33 million last year.
So exceptional was Apple's Q1 performance that analysts scrambled to increase the company's share target price, with Piper Jaffray analyst Gene Munster setting the highest bar at $670.
Munster also made an interesting comment to his clients, as quoted by Apple Insider: "For the last eight years, Apple has been blowing away analyst estimates."
OK, then, what can we do about that, analysts? How about not following Apple's notoriously low guidance (which, for Q1, was $9.30 a share on $37 billion in revenue)? How many times are you going to be fooled by that old showman's trick? Honestly.
Of course, performance versus expectations is a Wall Street game. The bottom line is that Apple is an incredibly healthy company right now. Wednesday's surge in stock price pushed Apple past Exxon Mobil (NYSE: XOM) as the most valuable public company in the world with a market capitalization of $415 billion (to Exxon's $413 billion).