What Some Of The Street's Top Apple Analysts Are Saying Before Earnings

October 26, 2015

35

What Some Of The Street's Top Apple Analysts Are Saying Before Earnings

Shares of Apple Inc. (NASDAQ: AAPL) were lower by more than three percent Monday afternoon.
The company will report its fourth-quarter (September ending) results on Tuesday.
Analysts are mostly mixed ahead of the much anticipated report.

Apple will report its fourth-quarter results after Tuesday's market close. Estimize is expecting the company to earn $1.91 per share on revenue of $51.358 billion. This compares to the consensus estimate calling for the company to earn $1.88 per share on revenue of $50.798 billion.

Here is a look at what some of the Street's top analysts are saying ahead of the print.

Cowen: Stock Remains In ‘Holding Pattern' With ‘Upward Bias'

Timothy Arcuri is expecting Apple to earn $1.87 per share on revenue of $51.5 billion, an estimate above the consensus as the launch of its new iPhone in China "argues for upside."

Arcuri is modeling 50 million iPhone units, 9.5 million iPad units and around five million Watch units. As a whole, the company should report a gross margin of 39 percent. The analyst also pointed out that his most recent consumer survey pointed towards an "increased iPhone penetration growth" and "meaningful future loyalty" at key U.S. operators.

Nevertheless, the analyst stated that Apple's stock remains stuck in a "holding pattern," although with an "upward bias."

Shares remain Market Perform rated with a price target raised to $135 from a previous $130.

Pacific Crest: iPhone Unit Concerns ‘Mostly Priced In

Andy Hargreaves of Pacific Crest is expecting Apple to earn $1.88 per share on revenue of $51.0 billion.

The analyst is expecting Apple's iPhone Gross margin to be "relatively stable" in the near term, but over the longer term he is expecting a declining iPhone gross margin. In fact, the analyst is now guiding his first-quarter iPhone unit estimate to be 66.9 million (from a prior 62.4 million), an estimate that is likely be below both buy and sell-side analyst expectations.

Despite a cautious tone, Hargreaves argued that Apple's stock remains attractive given the "extraordinary stickiness" of the iOS platform as well as the "strong pricing power" of the Apple brand and ecosystem.

Shares remain Sector Weight rated with no assigned price target.

Citi: Removing Apple From Focus List

Jim Suva of Citi removed Apple from the "Citi US Focus List" on October 23.

According to Suva, five key concerns remain unresolved ahead of the earnings report: 1) how are the new iPhone 6S and 6S Plus unit sales performing relative to expectations and can sales continue to grow given the maturing smartphone market, 2) what are the expectations for the iPad Pro within the enterprise sector, 3) what margin expansion drivers can be tapped, 4) update on the Watch, 5) what initiatives are being planned to drive revenue higher for iTunes, App Store, and Apple Pay.

Shares remain Buy rated with an unchanged $145 price target.

Drexel Hamilton: ‘Super Cycle’ Continues

Brian White of Drexel Hamilton is estimating Apple will earn $1.88 per share on revenue of $52.3959 billion.

White noted that his checks in China and Taiwan suggested that Apple’s supply chain was a “standout” relative to other smartphone vendors. Coupled with the strong performance from his “Apple Monitor” data, the company should still exceed expectations despite ongoing economic concerns surrounding China’s economy.

White continued that he is projecting Apple to deliver over 100 percent year over year revenue growth in China during the quarter, helping the company exceed his prior iPhone forecast of 50.25 million in the quarter.

White is also estimating Apple (conservatively) delivered 5.47 million Mac units in the quarter and shipped 9.7 million iPad units, although there may be modest downside to the estimate. Finally, the analyst is expecting Apple to report it shipped 4.25 million Watch units and the new device should be a “big hit” this holiday season and any forward guidance should reflect that.

Shares remain Buy rated with an unchanged $200 price target.

Elsewhere On The Street

Analysts at Cannacord Genuity maintained a Buy rating (October 20) with an unchanged $160 price target.

Analysts at FBR & Co. maintained an Outperform rating (October 20) with an unchanged $175 price target.

Analysts at Morgan Stanley maintained an Overweight rating (October 11) with a price target raised to $162 from a previous $155.