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Some Points Of Focus For Apple's Impending Q4 Print

Some Points Of Focus For Apple's Impending Q4 Print
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Apple Inc. (NASDAQ: AAPL) is scheduled to report earnings Thursday after the market close, and HSBC's analyst, Steven Pelayo, expects to see a report in line with consensus. He estimates quarter-over-quarter revenue growth at 11 percent and EPS of $1.88.

Analyst's Take: Rewards And Risks

Pelayo's estimates are mostly in line with consensus, except for iPhone shipments, which are below consensus because of potentially softer demand for iPhone 8 and constrained iPhone X ramp. He reiterates a Buy rating on the stock, with a price target of $193. The analyst calculated his price target by applying 15 times 2018 EPS multiple. This multiple is a discount to the market, mega-cap tech and other consumer luxury peer multiples, said Pelayo (see his track record here).

Pelayo expects the stock to trade higher in 2018 on a better product mix driving ASP and faster growth from the services segment. He added that recent news indicates a potentially better Chinese market and PC market, while he sees some risks to December quarter.

Pelayo named the main risks for the stock as potential short-term manufacturing problems and a weaker product mix impacting ASP and margins.

Other risks include:

  • Intense competition.
  • Rapid technological changes.
  • Shifts toward more emerging market demand where Apple's premium pricing could be a headwind.
  • Managing a diverse distribution channel.
  • Difficulty in receiving continued support from third-party software developers for applications and the required software.
  • IP protection and legal resolutions regarding patent infringement cases.
  • Worse than expected changes in tax legislation around the globe.
  • Unfavorable global and regional economic conditions.

Related Link: Traders Weighing Critical Questions Ahead Of Apple Earnings

Latest Ratings for AAPL

Mar 2018BarclaysMaintainsEqual-WeightEqual-Weight
Feb 2018Raymond JamesReinstatesMarket Perform
Feb 2018Goldman SachsInitiates Coverage OnNeutral

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Price Target Previews Reiteration Best of Benzinga


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