Drexel's Brian White Says Apple Shares Will Bottom This Summer; Reiterates Buy

Apple Inc. AAPL reported robust 3QFY16 results on July 26, while issuing its 4QFY16 guidance above expectations.

Drexel Hamilton’s Brian J. White maintains a Buy rating on the company, with a price target of $185.

Stock Will Bottom

“We believe Apple's better than expected performance and constructive conference call will begin to shift sentiment away from the "gloom and doom" mentality that has engulfed the Apple story over the past several months,” White mentioned.

The analyst expects the stock to bottom during this summer, with the estimates indicating that the sales and profit cycle bottomed in 3QFY16.

3QFY16 Results

For 3Q, Apple reported its sales at $42.36 billion, ahead of the estimate and the consensus, with the pro forma EPS at $1.42 also beating expectations.

“Although we had expected Apple's iPhone unit cycle to reach a bottom in 3Q:FY16, stronger than expected iPhone demand driven by the new iPhone SE resulted in the trough occurring in 2Q:FY16,” White noted.

Following the 37 percent iPhone unit growth in FY15, White expects iPhone units to declined 9 percent year on year in FY16, up from the previous estimate of an 11 percent decline.

The analyst continues to expect iPhone units to return to growth in 2QFY17, following the launch of the iPhone 7 in September.

The company reported iPhone unit sales of 40.4 million for 3QFY16, ahead of the estimates, while iPad units of 9.95 million and also beat the estimate.

The revenue and EPS estimates for 4QFY16 and the FY17 EPS estimates have been raised.

At time of writing, Apple Inc. was up 7.35 percent at $103.79, shortly after Wednesday's opening bell.

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