Goldman On Apple: Street Estimates Will Rise For First Time In 6 Months Off Earnings, Into iPhone 7 Launch

Apple Inc. AAPL is scheduled to report its F2Q, ended March 31, earnings on April 25. Goldman Sachs’ Simona Jankowski maintained a Buy rating for the company, with a price target of $155, saying that the company is entering an “upward estimate revision cycle.”

Goldman Sachs’ survey of over 1,000 US consumers suggests that “extremely strong pent-up demand” for the iPhone 7, with 44 percent of respondents indicating they had plans to buy the iPhone 7 in the fall. “This implies a shortening of the replacement cycle, as a third of upgrades are expected to come from current generation (<1 year old) iPhones,” analyst Simona Jankowski wrote.

He added that the survey also reflects a large number of iPhone 7 sales to switchers, close to 25 percent, from other platforms like Android, which points towards Apple continuing to gain share.

Expectations For F2Q & F3Q

Jankowski expects Apple to report F2Q revenues of $54.4bn, ahead of the consensus expectation of $52.0bn and guidance of $50-$53bn. The company is estimated to post an EPS of $2.17, beating the consensus expectation of $2.00. The beat is likely to be driven by higher-than-expected iPhone volumes, which are estimated at 53.6mn units versus the consensus expectation of 50.0mn units.

The analyst expects Apple to guide to F3Q revenues of $46.5-$48.5bn, reflecting “its typical conservatism,” versus consensus expectations of $47.6bn. Goldman Sachs’ estimate for the quarter is higher, at $50.4bn, given a higher estimate for June quarter iPhone units - 47mn versus consensus expectation of 44mn.

“Our above-consensus near-term views are driven by our supply chain tracker analysis, as well as our consumer survey, which shows stable demand into the June quarter,” Jankowski commented.