Slowdown? What slowdown?
Apple Inc reported blockbuster iPhone sales in China, suggesting that worries about the company's growth trajectory in the world's second-largest economy are overdone.
Apple's shares rose nearly 3 percent in early trading on Wednesday.
The stock has lost about 7 percent of its value in the past three months as investors fret that the slowing Chinese economy would derail Apple's successful run in the country.
Apple's sales in Greater China, including Taiwan and Hong Kong, nearly doubled in the third quarter, accounting for nearly a quarter of the company's total sales.
"If the Chinese consumer is pulling back on spending then it seems to be either at the very high luxury end or maybe on some of the everyday non-essential items," Atlantic Equities analyst James Cordwell said.
"I think the smartphone is increasingly viewed as an essential in China. So, I don't see the economy weighing significantly on Apple growth over the next few quarters."
Apple's results follow stronger-than-expected earnings from companies including Alibaba Group Holding Ltd and Nike Inc.
RISING MIDDLE CLASS
Apple Chief Executive Tim Cook downplayed concerns about China on Tuesday.
"If I ... just look at how many customers are coming in our stores regardless of whether they are buying, how many people are coming online and in addition to looking at our sales trends, I would not know there was any economic issue at all in China," Cook said on a conference call.
Many large U.S. companies, including United Technologies Corp and General Electric Co, have expressed concerns about China's slowing growth.
However, William Blair analyst Anil Doradla said Apple has several factors in its favor.
"These include the rising middle class and stronger purchasing power in the emerging markets, especially China and India, combined with the company facing little or no competition in the high end of the market," Doradla wrote in a note.
Few analysts changed their price target on Apple's stock after the results and only Pacific Crest changed its rating, upgrading the stock to "overweight" from "sector weight", according to Thomson Reuters data.
Of 50 analysts covering the stock, 41 rate it "buy" or higher, while only one rates it "sell," according to Thomson Reuters data. Their median price target is $150.
Apple's stock was trading at $117.35 after the open.
(Reporting by Abhirup Roy and Tenzin Pema in Bengaluru, Writing by Sayantani Ghosh; Editing by Savio D'Souza)