Drexel's Apple Monitor Shows Better-Than-Seasonal June Performance

Drexel Hamilton’s Apple Monitor revealed June sales and performance were better than the historical averages.

Analyst Brian J. White maintained a Buy rating on Apple Inc. AAPL, with a price target of $185.

Apple Monitor

White expects month-on-month sales growth to continue through summer, with the iPhone 7 supply chain beginning to ramp.

“Given the rising macro concerns and another round of "gloom and doom" circling Apple, the stock has come under more pressure over the past month and we believe represents an attractive buying opportunity,” the analyst mentioned.

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According to the Apple Monitor, June sales rose almost 2 percent month-on-month, better than the average decline of almost 3 percent seen over the past 11 years.

Due to the increased seasonality associated with the iPhone, Junes sales on the Apple Monitor had declined by an average of 6 percent over the past five years, while also decreasing 6 percent in June 2015.

“That said, Apple's June quarter revenue outlook is well below historical seasonality and softer than the performance experienced in the June quarter of 2015,” White cautioned.

Looking Ahead

The analyst explained that this weakness usually occurs during the late stages of an iPhone cycle, while the macro environment continues to be more of a headwind than a tailwind.

However, White expects Apple’s stock valuation to remain attractive and that the upcoming iPhone 7 ramp would lead to the company eventually returning to positive year-on-year iPhone unit growth by 2QFY17.