Societe Generale Reiterates Buy Rating, $500 PT on Apple Ahead of Q3 Results

In a report published Wednesday, Societe Generale analyst Andy Perkins reiterated a Buy rating and $500.00 price target on Apple AAPL. In the report, Societe Generale noted, “Apple is to report its Q3 2013 results on 23 July after the markets have closed. Our work suggests that Asian handset exports remained strong in the second calendar quarter. We forecast that worldwide handset unit sales could total 440, up 8% yoy or 4% sequentially. We believe that demand for the iPhone remains reasonable but that demand for the iPhone 5 has tailed off even more quickly than the demand for the 4S in 2012. We are anticipating 26.1m iPhone units sold within the quarter (Q3 FY12 26.0m, cs 27m), with the iPhone ASP falling to below $600 for the first time. For the iPad, we estimate that 21m were sold, of which 4m were iPad minis. We expect sales of $35.1bn (cs $35.0bn, guidance $33.5bn to $35.5bn), with handset making up 43% and tablets 26% of total turnover. The adverse mix (lower sales of high-margin iPhones and more lower-margin tablets) in the quarter explains the lower margins. We calculate that gross margins on iPhones have already begun to fall, down to 43% in Q3 FY13 from 54% a year ago. This is the driving force behind our assumption that operating margins only reached 25% (cs 25.6%) in the quarter and EPS was $7.4 (cs $7.3).” Apple closed on Tuesday at $430.20.