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Goldman On Apple: Street Estimates Will Rise For First Time In 6 Months Off Earnings, Into iPhone 7 Launch

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Goldman On Apple: Street Estimates Will Rise For First Time In 6 Months Off Earnings, Into iPhone 7 Launch
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Apple Inc. (NASDAQ: AAPL) is scheduled to report its F2Q earnings, ended March 31, on April 25. Goldman Sachs’ Simona Jankowski maintained a Buy rating for the company, with a price target of $155, saying the company is entering an “upward estimate revision cycle.”

Goldman Sachs’ survey of over 1,000 U.S. consumers suggests “extremely strong pent-up demand” for the iPhone 7, with 44 percent of respondents indicating they had plans to buy the iPhone 7 in the fall. “This implies a shortening of the replacement cycle, as a third of upgrades are expected to come from current generation (<1 year old) iPhones,” Jankowski wrote.

He added the survey also reflects a large number of iPhone 7 sales to switchers, close to 25 percent, from other platforms like Android, which points towards Apple continuing to gain share.

Related Link: Drexel Hamilton's 'Apple Monitor' Shows Strong Performance In March

Expectations For F2Q & F3Q

Jankowski expects Apple to report F2Q revenues of $54.4 billion, ahead of the consensus expectation of $52.0 billion and guidance of $50-$53 billion. The company is estimated to post an EPS of $2.17, beating the consensus expectation of $2.00. The beat is likely to be driven by higher-than-expected iPhone volumes, which are estimated at 53.6mn units versus the consensus expectation of 50.0mn units.

The analyst expects Apple to guide to F3Q revenues of $46.5-$48.5bn, reflecting “its typical conservatism,” versus consensus expectations of $47.6 billion. Goldman Sachs’ estimate for the quarter is higher, at $50.4 billion, given a higher estimate for June quarter iPhone units - 47 million versus consensus expectation of 44 million.

“Our above-consensus near-term views are driven by our supply chain tracker analysis, as well as our consumer survey, which shows stable demand into the June quarter,” Jankowski commented.

Latest Ratings for AAPL

DateFirmActionFromTo
Jun 2017MizuhoDowngradesBuyNeutral
Jun 2017Pacific CrestDowngradesOverweightSector Weight
Apr 2017Morgan StanleyMaintainsOverweightOverweight

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