Baird Remains Cautious On Apple For Q3, Says Q4 Consensus Estimates 'Too High'

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Baird remains cautious on Apple Inc. AAPL ahead of its quarterly results.

The brokerage forecast Q3 revenue and EPS of $42.0 billion and $1.37, with 39.9 million iPhone shipments. Street expects EPS of $1.38 on revenue of $42.09 billion. Both the Baird and consensus estimates are lower than last year when Apple earned $1.85 a share on revenue of $49.60 billion.

"We expect a roughly in-line FQ3, though believe consensus forecasts for FQ4 could be too high, pending exact timing of the next iPhone and whether other new products are introduced as well. More significantly, we remain near the low of the street for 2017," analyst William Power wrote in a note.

Related Link: Apple's Q3 Report: The Current Sell-Side Sentiment

Power said Q2 wireless results from Verizon Communications Inc. VZ, AT&T Inc. T and Sprint Corp S over the past few days confirm slowing smartphone sales.

Though not a significant surprise, and despite weakening sentiment, the analyst said consensus estimates doesn't fully reflect the continuing slowdown, posing risk to Apple's Q4 outlook.

Power sees Q4 revenue and EPS of $43.4 billion and $1.47, respectively, versus consensus of $45.9 billion and $1.61. For fiscal 2017, the analyst expects revenue and EPS of $202.6 billion and $7.46, respectively, versus consensus of $223.6 billion and $8.83.

That said, Power, who has an Outperform rating and $115 price target on the stock, is positive on the long-term fundamentals of Apple.

"We continue to like Apple's longer-term platform positioning, but remain cautious near term until estimates are appropriately reset for slowing upgrade cycles and global macro challenges," Power added.

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Posted In: Analyst ColorPreviewsReiterationAnalyst RatingsTrading IdeasBairdiPhoneWilliam Power
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