Market Overview

Sacconaghi Watching Apple's Q2 Earnings For Signs iPhone SE Is Cannibalizing Sales From iPhone 6

Sacconaghi Watching Apple's Q2 Earnings For Signs iPhone SE Is Cannibalizing Sales From iPhone 6

Bernstein’s Toni Sacconaghi, Jr. expects Apple Inc. (NASDAQ: AAPL) to report relatively in-line results when it reports it FQ3 earnings on July 26.

Sacconaghi maintained an Outperform rating on the company, while lowering the price target from $135 to $125.

FQ3 Expectations

The analyst expects the company to report 41 million iPhone units, with revenue of $42.8 billion and EPS of $1.42, in-line with Apple’s guidance range.

Although revenue is expected to marginally beat the consensus, Sacconaghi expects a sequential revenue decline of 15 percent, slightly better than the historical average decline seen in the past four years in FQ3, “driven expected demand elasticity from the release of lower-priced iPhone SE at the beginning of the quarter, offset by channel inventory drawdowns.”

Related Link: Apple's Near-Term iPhone SE Strength Offsets 6s/6s Plus Weakness

China is likely to have been weak during the quarter, while iPhone unit sales are expected to beat the consensus.

iPhone Unit Expectations

“We expect channel inventory to decline 2M units from FQ2's level of 21.3M units, with a decline in iPhone 6/6S inventories of 4M units offset by a 2M channel inventory build of iPhone SE inventory due to the timing of the product release,” Sacconaghi stated.

However, the analyst expressed concern regarding the impact of the new iPhone SE on Apple’s financials, including ASPs.

Sacconaghi explained that iPhone unit shipments of 42 million or higher would be encouraging, while 39 million or lower would be a cause for concern, pointing to either the iPhone SE cannibalizing iPhone 6S/6 or limited demand elasticity.

Did you like this article? Could it have been improved? Please email to let us know!

Latest Ratings for AAPL

Jan 2021CascendMaintainsBuy
Jan 2021Evercore ISI GroupMaintainsOutperform
Jan 2021Raymond JamesMaintainsOutperform

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings


Related Articles (AAPL)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas Price Target Previews Top Stories Analyst Ratings Tech Trading Ideas Best of Benzinga

Latest Ratings

TXNDeutsche BankMaintains170.0
BYDDeutsche BankMaintains56.0
MELIDeutsche BankMaintains2,200.0
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