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Apple (AAPL) Off Balance Sheet Commitments Suggest Possible 6S Ramps Coming, RBC Capital Says

August 4, 2015 1:53 PM EDT
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After reviewing Apple's (NASDAQ: AAPL) latest 10-Q, RBC Capital Amit Daryanani said the firm's off balance sheet commitments suggest a possible 6S ramp is coming.

Daryanani commented, "Our review suggests that Apple has 1) material ramp planned for 2H15/1H16 given increased manufacturing and component purchase commitments, 2) Capex was adjusted down by $1.0B, 3) China contributed nearly 60% of incremental sales and higher percentage of incremental operating profits, and 4) Americas profit margins were down, likely due to currency (Canada) and headwind from AppleWatch."

He added, "As of June 2015, AAPL’s manufacturing and component purchase commitments stood at $21.7B (+40.9% y/y). In addition, other off balance sheet obligations that will be used for tooling, capital assets, advertising, R&D and other stood at $4.8B (-14.3% y/y). The material spike in off balance sheet commitments for manufacturing and component purchase, which is the highest number we have seen, suggests AAPL is potentially not just gearing up for iPhone 6S ramp but could be securing capacity for incremental products. We would note the spike in purchase commitments is in-line to modestly higher than trends we have seen historically ahead of a product launch."

The firm maintained an Outperform rating and price target of $150 on AAPL.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $118.44 yesterday.



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