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