The September quarter may seem like the corporate equivalent of a lame duck for
as the final quarter without any contribution to earnings from the newly unveiled iPhone 12 lineup. Investors are focused on demand for the new phones, but the results may still yield some surprises.
Wall Street is busily tweaking its numbers, resulting in a flurry of Monday research notes, before the figures come out late on Thursday. The consensus forecast is for revenue of $64.2 billion and per-share profits of 71 cents.
Atlantic Equities analyst Ianjit Bhatti on Monday assumed coverage of Apple (ticker:AAPL) from one of his colleagues, lifting the firm’s rating to Overweight from Underweight, and setting a price target of $150. At the heart of his call is the idea that it would be a mistake to value Apple like just another tech company.
“Having created an enduring premium consumer electronics brand, we believe that Apple’s product business should be valued in line with other premium and luxury consumer stocks, rather than traditional computer peers,” Bhatti writes. “Apple’s focus on delivering superior user experiences through design, enabled by its unsurpassed silicon to software design capabilities, has resulted in a premium product positioning, differentiating Apple against computing peers.”
Citi’s Jim Suva sees potential upside to consensus estimates driven by iPads, Macs and Wearables, saying “work from home and stay at home trends continued to drive [an] uptick in consumer tech spending during the quarter.” He sees a promising hint in a recent strong earnings report from the peripherals company
(LOGI), which said that iPad accessories were up 144% in the quarter. Suva maintains a Buy rating on the stock and a target of $125 for the share price.
Meanwhile, Cowen’s Krish Sankar repeats his Outperform rating and $133 price target. He thinks September quarter results will be in line with Street estimates, driven by strong demand for iPads and Macs. For the December quarter, he sees sales up 48% sequentially and 5% year over year, with iPhone unit sales hitting 70 million.
“Apple remains one of out top ideas in the hardware space,” he writes.
Raymond James analyst Chris Caso, who has an Outperform rating on the stock, reports that lead times for the iPhone 12 as of Friday had stretched out to 2-3 weeks in all markets other than the U.S., where the phone was available for same-day or next-day pick up in most parts of the country. He echoes other analysts in finding that the iPhone 12 Pro is in tighter supply than the base iPhone 12, noting that Pro models are not available for in-store pickup in the US at this time.
“This is generally consistent with prior launches, where inventories of the higher-end devices are generally lower than the mass market tier,” he writes.
Evercore ISI analyst Amit Daryananai also repeats his Outperform rating and $135 price target, while adding a “tactical outperform” element to his call. He says the stock “should keep working higher,” driven by strong demand for hardware other than iPhones, acceleration in the services business, and strong iPhone 12 demand, driven in part by aggressive promotions offered by wireless carriers in the U.S. Apple’s commentary about the December quarter will be more positive than the Street expects when the company reports results on Thursday, he says.
RBC Capital’s Robert Muller also had a bullish note on Apple on Monday, discussing the results of a survey of more than 800 Apple and Android users on their buying intentions.
“We believe the results bode well for Apple’s newly released 5G enabled phones, which we expect will kick off a multi-year upgrade cycle,” he writes. “iPhone users appear quite sticky with 90% of iPhone customers either ‘definitely’ or ‘likely’ to remain in the ecosystem. This compares to just 71% of Android customers. Further, 24% of Android customers are considering an iPhone for this cycle, with 16% considering a switch to a 5G model. The Apple ecosystem remains strong with the average iPhone user owning 1.9 additional Apple products.”
He kept an Outperform rating and $132 price target on Apple shares.
Apple shares held their ground on Monday afternoon, slipping 0.5% to $114.48, while the
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