UPDATE: Nomura Initiates Apple at Neutral; Upside Limited

Nomura initiated coverage on Apple

with a Neutral rating and a $710 price target. Nomura said, "Our main conclusions are: 1) Near-term dynamics appear strong; 2) Medium-term dynamics look solid; 3) Longer term, we see 10ppt downside to iPhone gross margins and 4) The scope for major upside surprises appears modest. Our supply-side checks in Asia (end-September visits) in combination with our new demand-side model suggest Apple's iPhone sales could slightly beat recently lowered expectations for fiscal Q1. We see no material downside risk to consensus estimates beyond temporary issues related to supply. We expect emerging markets to drive growth thereafter; however, we expect this transition to undermine margins." Apple closed at $638.17 on Monday.