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Apple's Next Couple Quarters Might Be Less Important Than Usual

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Apple's Next Couple Quarters Might Be Less Important Than Usual

Investors hoping for some excitement and the corresponding volatility in Apple Inc. (NASDAQ: AAPL)'s stock may be out of luck in the near term.

According to UBS' Steven Milunovich, many Apple investors remain focused on fiscal 2018, which corresponds with the launch of the new iPhone. This naturally means that Apple's earnings report prior to the new iPhone launch will be "less important than usual."

Q2 Expectations

Apple is scheduled to report its fiscal second-quarter earnings report on May 2 after market close. While the analyst believes it will be "mostly uneventful," there are some key metrics for investors to look out for, including:

    1. Whether iPhone sales move up or down year-over-year.
    2. Commentary out of China and any signs of a return to growth next cycle.
    3. What impact the strong dollar has had on gross margins and rising input costs.
    4. Whether the iPad rebound after a 19 percent unit decline in the prior quarter.
    5. Third-quarter guidance.

Milunovich is modeling Apple to report revenue of $52.285 billion (versus the Street's estimate of $52.995 billion) and an earnings per share of $2.00 (versus the Street's estimate of $2.02). The analyst is also estimating Apple to report an iPhone average selling price (ASP) of $670 and 50.0 million units shipped and total gross margin rate of 38.9 percent.

Milunovich is also expecting Apple to boost its capital return program, including an increase in its total amount authorization from $250 billion to $310 billion and authorized buybacks from $175 billion to $215 billion. The analyst is also expecting Apple to boost its dividend by 10 percent to $0.62 per share.

Bottom line, Apple's quarter won't be "earth shaking" but that doesn't mean investors shouldn't be paying close attention.

Shares remain Buy rated with an unchanged $151 price target.

Related Links:

UBS Considers The Prospects Of A $1,000 iPhone

Apple Just Won A Patent Dispute In China

Latest Ratings for AAPL

DateFirmActionFromTo
Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

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