Apple Is Drexel's Top Pick For The Second Half Of 2016

With 96 percent sales reported for the Apple Monitor, Drexel Hamilton’s Brian White believes July sales and performance for Apple Inc. AAPL has been stronger than the historical averages. He maintained a Buy rating on the company, with a price target of $185.

July Sales Up

Naming Apple as the Top Pick for 2H16, the analyst mentioned that preliminary July sales for the Apple Monitor grew approximately 14-15 percent month on month, stronger than the average rise of 9 percent over the past 11 years.

“Over the past ten years, this July was the second-best July performance for our Apple Monitor,” White stated.

Related Link: Oppenheimer Sees Near-Term Challenges For Apple, But Bullish On 2018 iPhone Cycle

Sentiment Shift

The analyst believes the better than expected 3QFY16 results and the 4QFY16 guidance has begun to shift investor sentiment away from the “gloom and doom” that has affected the stock through 2016.

“Similar to the summer of 2013, we believe this summer will prove to be a bottoming process for Apple's stock with our estimates indicating that the sales and profit cycle bottomed in 3Q:FY16,” White said.

iPhone Units To Grow

The analyst believes the reasons for the iPhone unit declines over the past two quarters have been misunderstood and therefore the concerns are overblown.

According to the Drexel Hamilton report, “the iPhone unit cycle troughed in 2Q:FY16 and we expect iPhone unit growth to return in 2Q:FY17 with the iPhone 7 and growth for FY:17.”

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