Apple Upgraded At Societe Generale, Firm Sees 'Encouraging' Start For Apple Watch

In a report published Monday, Societe Generale analyst Andy Perkins upgraded the rating on Apple Inc. AAPL from Hold to Buy, while maintaining a price target of $140, on continued growth in the company's revenues. Apple is expected to report robust F3Q15 results, driven by strong sales of Apple Watches and improved iPhone sales volumes. The company's total sales for the quarter are expected to be $50.2 billion, with gross margin of 39.1 percent and an EPS of $1.84. "We estimate that the company sold 5m Apple Watches at an average price of close to $500. We have upgraded our iPhone forecast volumes to 48 m (from 43m) at an ASP of $646, slightly down on the previous quarter due to higher European sales," analyst Andy Perkins mentioned. China has emerged as a crucial market for Apple, with iPhone sales to the region exceeding US sales for the second consecutive quarter. This implies that "any slowdown in the Chinese economy, whether or not stemming from the recent stock market turmoil, could have an adverse impact on Apple's sales," Perkins added. In the report Societe Generale noted, "Given the recent weakness in Apple's share price, we are now just above our target of a 15% total shareholder return over 12 months." The expected successful launch of the new 6s handset in September 2015 and continuing healthy growth in revenues from the App Store are expected to boost the company's stock valuation.