Oppenheimer: Apple Is 'Taking China By Storm'

In a report published Tuesday, Oppenheimer analyst Andrew Uerkwitz commented on Apple Inc. (NASDAQ: AAPL)'s "strong" second quarter results but singled out the company's strength in emerging markets, especially China, as a key theme.Uerkwitz noted that Apple's "impressive" growth across all fronts in China including retail, developer support, iPhone and iPad sales will result in continued share gain in the country at the expense of its peers, specially Samsung Electroncs Co Ltd. In addition, China's momentum is unlikely to suffer as Chinese smartphone manufactures employ "aggressive" pricing strategies to gain sales.Switching to the domestic market, Uerkwitz answered why customers continue switching from other platforms to iPhone devices, as indicated by higher than expected iPhone sales. The answer, quite simply, is that Apple's ecosystem offers an "ever appealing" combination of quality hardware, ease of use, and unique feature sets (Apple Watch and Apple Pay) that users are appreciating more."We continue to believe Apple will gain share as it's in the middle of its best product cycle driven by its compelling ecosystem," Uerkwitz wrote. As a result of continued market share gains, the analyst raised his fiscal 2015 earnings per share estimate to $8.94 from $8.37. His 2016 earnings per share estimate was also boosted higher to $10.37 from $9.76. However, the analyst noted that there exists an iPhone "growth risk" with a projected 5.3 percent growth in iPhone sales in fiscal 2016 versus 46.2 percent in fiscal 2015. As such, analysts will "have to be comfortable" with slower growth with near-perfect execution.Shares remain Outperform rated with an unchanged $155 price target.