Brean Sees Apple Returning To $130 Before End Of 2015

• Despite the appreciation last week, Apple Inc. AAPL shares are down 13 percent since June 1, 2015.
• Brean Capital’s Ananda Baruah maintained a Buy rating for the company, with a price target of $170.
• There is upside to the September quarter and December quarter EPS estimates, Baruah said, citing iPhone sales and gross margins as the drivers.

Analyst Ananda Baruah said that Apple could record EPS of $2.00 in the September quarter, beating the Street estimate of $1.87, and of $3.29 in the December quarter, higher than the Street estimate of $3.19. The upside is likely to be driven by iPhone units of 47M and 72M and gross margins of 39.8 percent and 40.4 percent, as compared to the Street estimates of 39.3 percent and 39.8 percent, respectively.

“Furthermore, we believe that iPhone “tension” likely lies to the upside for our Dec Q estimate of 72M (we could see as high as 80M)…We continue to believe that Street numbers are materially low through ’17,” Baruah added.

The analyst believes that Apple has “a handful of new products” over the next 12 months. These could include:

1. iPhone 6S – Baruah believes Apple will introduce the iPhone 6s at its September 9 event.
2. New phone form-factor in mid-CY16 - “While we don’t yet have a convicted view, we believe a solid view is a smaller functional iPhone model or a “skinny functional” (our term) iPhone 6 sized phone.”
3. iPhone 7 – The analyst expects Apple to launch iPhone 7 in September next year. “Key new functionality could include longer battery life, faster processor, wrap around screen, and AAPL’s initial use of the acquired Primesense no-touch swipe command technology.”
4. iPad 12.9 inch model – This could be introduced at the September 9 event.