Market Overview

Wells Fargo: Apple 'Will Have To Materially Beat' Expectations In Its Q1 Results

Share:
Wells Fargo: Apple 'Will Have To Materially Beat' Expectations In Its Q1 Results

Maynard Um of Wells Fargo commented in a note on Monday that Apple Inc. (NASDAQ: AAPL) will need to “materially beat” expectations in its upcoming first quarter results.

Um expects Apple will report an earnings per share of $2.77 on revenue of $69.1 billion. This compares to the Street's estimate of an EPS of $2.59 and revenue $67.3 billion.

According to Um, Apple's “other categories” performance will only matter if iPhone units remain status quo and that bears will be closely watching iPhone sales, particularly iPhone 6 Plus.

“With what we believe to be heightened expectations, we believe Apple would have to materially beat our FQ1 unit estimate of 67 million,” Um wrote. “Additionally, we believe our gross margin forecast of 39.6 percent (above guide of 37.5-38.5 percent due to our mix expectations) could be somewhat offset by currency.”

Looking forward, the question remains if a shift to 32GB from 16GB for the low-end iPhone could drive mix shift back to the lower end or if the company keeps the current configuration. Um states that this decision could have a large impact on iPhone average selling prices and margins.

Bottom line, Um expects a “strong result and outlook” from Apple, but tougher compares, lack of new large carriers to add, increasing challenges to differentiate the next cycle justifies a reiteration of a Market Perform rating but with a valuation range raised to $100 to $110 from a previous $92 to $102.

Latest Ratings for AAPL

DateFirmActionFromTo
Oct 2020Credit SuisseMaintainsNeutral
Oct 2020Morgan StanleyMaintainsOverweight
Oct 2020RBC CapitalMaintainsOutperform

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: iPhone iPhone 6 Maynard Um Wells FargoAnalyst Color Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
MSFTStifelMaintains245.0
TXRHJP MorganMaintains67.0
SBUXJP MorganMaintains82.0
MCDJP MorganMaintains220.0
CMGJP MorganMaintains1,115.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com