Drexel Says Apple Super-Cycle Continues

• Apple Inc. AAPL shares are down 12 percent in the last six months, despite touching a high of $132.07 on July 20.
• Drexel Hamilton’s Brian J. White maintained a Buy rating on the company, with a price target of $200.
• Apple is expected to report strong F4Q results, beating the Street’s revenue and EPS expectations, White stated.

Apple is scheduled to report its F4Q15 earnings at 5pm. Analyst Brian White said that their recent China-Taiwan Tech Tour had highlighted the Apple supply chain as a “standout relative to other smartphone vendors.”

Given the strength in Apple’s supply chain and the robust performance revealed by Drexel’s Apple Monitor in the September quarter, the company is likely to report its 4Q revenue ahead of the estimate of $52.4 billion, which is already higher than the Street expectation of $51.1 billion, White commented.

He added that Apple could also exceed the EPS estimate of $1.88, which is in-line with the Street expectation. Apple's 4Q revenue guidance is $49-$51 billion, with implied EPS of $1.80 at the mid-point of this revenue range.

White expects Apple to have continued to generate more than 100 percent y/y revenue growth in Greater China during 4Q, and to beat Drexel’s iPhone forecast of 50.25 million units, despite concerns around China's economy and difficult iPhone comps. Apple.

“We are projecting 5.47 million Mac units in 4Q:FY15 and our estimate could be conservative, while our iPad forecast of 9.7 million units may have modest downside,” the report added.

The company still appears to be “in the midst of a transformational super cycle,” and there is “significant upside potential” in Apple's stock, White stated.