An Extra Week in Apple's (AAPL) Dec. Qtr Could Drive Another 5-6M iPhone Units, RBC Capital Says
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RBC Capital analyst Amit Daryanani is raising estimates and his price target on Apple (NASDAQ: AAPL) to reflect the positive impact from an extra week in the company's December quarter. The firm reiterated an Outperform rating and bumped its price target to $117.00 (from $115.00).
"We are adjusting our Dec-qtr iPhone units higher given our understanding that FQ1 will have an extra week (14 week quarter vs. 13 normally)," Daryanani commented. "We estimate an extra week will result in ~5-6M incremental iPhone units for Dec-qtr and should enable a path towards iPhone unit growth starting in Dec-qtr. While optically this is a transient impact which will create a more severe q/q drop in March-qtr, near-term this should certainly make the model look more attractive – with y/y growth resuming in Dec-qtr. Furthermore, it should add ~200-300bps of incremental growth in FY17 on a y/y basis."
Net/Net, the analyst said, they continue to think AAPL stock work higher over the foreseeable future given: 1) expectation of easier compares, 2) new product launch and 3) stable to improving gross-margins.
The firm's FY17 revenue/EPS estimates of $221.5B/$8.88 are up from prior $215.8B/$8.65 estimates.
Shares of Apple closed at $108.00 yesterday.
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