Street Is Modeling For Apple's Largest Sequential Q2 Sales Decline In 18 Years

• Shares of Apple Inc. AAPL have been trending lower in recent months and are down 15 percent since October 26, 2015.
• Drexel Hamilton’s Brian J. White maintained a Buy rating on the company, with a price target of $200.
• Apple is expected to post the biggest quarter on quarter March quarter revenue decline in the last 18 years, while its sales and operating margins are likely to trough in 2QFY16.

Analyst Brian J White mentioned that Apple’s stock already reflects incremental weakness in the company’s March quarter performance. The analyst believes that 2QFY16 would be the trough in the company’s sales and operating profit cycle.

The analyst believes that the company would be able to meet its 1Q:FY16 sales guidance of $75.5-$79.96 billion, with an implied EPS of $3.17. While the sales of iPhone6s/6s Plus were not strong during the December quarter, the older models have been selling well, White noted, adding that Apple was nearing the end of its 6 series cycle.

Drexel Hamilton expects the company to sell 77.5 million iPhone units in 1QFY16, with Apple Watch sales estimated to be 7.7 million units during the quarter.

White believes that Apple may find it difficult to maintain its 99 percent year on year revenue growth achieved in 4QFY15 in Greater China. The company is likely to make an expanded push into China’s Tier 3-5 cities over the next one and a half years.

The analyst expects, India with its burgeoning smartphone market, to emerge as an important market for Apple in 2016.