Credit Suisse Reiterates Outperform On Apple Ahead of Earnings, Sees Product Rich Second Half, PT $525.00

This morning, Credit Suisse analyst Kublinder Garcha issued a note on Apple Inc. AAPL reiterating outperform on the stock and previewing earnings and the the rest of the year.

For the fiscal third quarter, Credit Suisse expects revenues of $34.8 billion and EPS of $7.43. The consensus forecast is for revenues of $35.2 billion and EPS of $7.33 so Credit Suisse expected slightly weaker revenue but better bottom line figures.

They forecast 27 million units of iPhones were sold in the fiscal third quarter, -28 percent from the second quarter and +4 percent from the third quarter a year ago. They note that if the firm makes the decision to discontinue the iPhone 4, 4S, and 5 and make the product portfolio consist of just two choices, margins could rise and they think Apple could earn $50 in EPS in the calendar year 2014.

They also note that a low-end iPhone, if announced, will have a more muted impact than the iPad Mini and other products did on margins. First off, margins are already lower so there is less downside from here. Second, they expect that the low-cost iPhone, if made with plastics as expected, could still get margins of 35 percent on the new product, which is below the iPhone 5's margin of 50 percent but in line with the overall firm average.

Overall, Credit Suisse reiterates outperform on the stock here and notes that the new products to come in the second half, led by a low-cost iPhone and potentially the ramp-up to the iPhone 5S.