Wells Fargo Reiterates on Apple as China Mobile Aims to Boost Unit Sales

In a report published Wednesday, Wells Fargo analyst Maynard Um reiterated Market Perform on

as China Mobile remains on track to boost unit sales, keeping its valuation range of $536.00-$581.00. According to the report, the analyst's estimates remain above consensus as China Mobile deal looks to push China sales to record levels. WSJ reports that Tim Cook is upbeat on the success of the China Mobile deal and expects sales in FQ1 2014 to be pushed to new highs in the region (FQ4 2013 sales of $5.7B), in part helped by the addition of China Mobile's 3,000 sales locations. “The deal may also help initial iPhone 6 units if China Mobile is included in the launch in September,” the report noted. “That said, the details of the agreement (pricing, margin, etc) are unknown and, thus, we believe gross margin bears watching. We maintain our view that FQ1 Street consensus of $14.03 is conservative and should rise to at least our $14.49 estimate (note every 1MM units results in roughly $0.22 EPS upside, all else equal). Our FQ2 EPS of $11.36 is also above the Street consensus of $10.89.” AAPL closed Tuesday at $557.00 with shares trading up at 1.94 percent.