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Goldman On Apple: 'Stock Likely Range-Bound Until iPhone 7'

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Goldman On Apple: 'Stock Likely Range-Bound Until iPhone 7'
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Apple Inc. (NASDAQ: AAPL) is likely to deliver a modest beat in its F3Q results, although shares could remain range-bound until the iPhone 7 launch in September, Goldman Sachs’ Simona Jankowski said in a report. He maintained a Buy rating on the company, with a price target of $124.

The modest beat is likely to be driven by better-than-expected iPhone SE demand, Jankowski commented. He expects Apple to report its F3Q revenues at $42.6 billion, versus the consensus estimate of $42.2 billion and guidance of $41-$43 billion; and EPS at $1.43, versus consensus expectation of $1.40. iPhone units may come in at 40.7 million, versus Street expectations of 39.9 million.

Related Link: Gene Munster: Apple Tends To Outperform By 12% Going Into iPhone Launch

Jankowski projected gross margins of 38.1 percent, versus the Street estimate of 37.8 percent and guidance 37.5-38 percent. Apple’s gross margins are likely to have been boosted by services partially offsetting the negative iPhone mix shift.

Guidance

The analyst expects Apple to guide to revenues of $45-$47 billion for F4Q, representing an 11 percent year-over-year decline at the midpoint, compared to the 13 percent decline reported in F2Q and the 15 percent decline at the mid-point of guidance in F3Q.

Q3 Results Unlikely To Be A Catalyst

“We don’t expect the report to serve as a meaningful catalyst for the stock, as all eyes are on the iPhone 7 launch in September,” Jankowski wrote. He added that iPhone 7 could lend upside to consensus FY17 estimates.

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Latest Ratings for AAPL

DateFirmActionFromTo
Jan 2017OTR GlobalDowngradesNegative
Jan 2017GuggenheimInitiates Coverage OnBuy
Dec 2016PiperJaffrayAssumesOverweightOverweight

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