Close

Brean Capital Sees 'Material Upside' for Apple (AAPL) June Quarter

June 2, 2015 10:07 AM EDT
Get Alerts AAPL Hot Sheet
Price: $170.79 -1.45%

Rating Summary:
    39 Buy, 25 Hold, 7 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
Join SI Premium – FREE

Brean Capital analyst Ananda Baruah reiterated a Buy rating and $170 price target on Apple (NASDAQ: AAPL) Tuesday, saying the company is positioning for material June quarter EPS upside.

"Fundamentally speaking, we believe AAPL stands to deliver material EPS upside from 1) iPhone ships through ’17, 2) favorable GM from both iPhones and iPhone mix (more 6 Plus’ than realized), and 3) materially more Opex $ leverage through at least ’16 as AAPL realizes the benefits from the recent iPhone 6 and iWatch investment cycles," Baruah said.

The analyst believes the June quarter is tracking to potentially 51M – 53M units, stronger than Street of 48M – 49M and in-line to potentially stronger than some of the recent estimate revisions of 50M – 51M. "We believe that AAPL’s implied unit guidance was ~49M units, so this would signify material unit upside to guidance. Additionally, we continue to believe that the mix of iPhone 6 Plus’ remains materially stronger," the analyst said.

Accordingly, they believe AAPL is driving to material Jun Q EPS upside of $1.83 - $1.95 (vs Street of $1.74). Specifically, the firm's work suggests that Jun Q revenue, GM and EPS could be $51.2B - $52.5B (vs Street of $48.2B), 39.0% - 40.1% (vs Street of 39.4%), and EPS of $1.83 - $1.95 (vs Street of $1.74).

The firm is reiterating their bullish view on the following key out-of-consensus points underpinning their thesis:

1. Street remains materially low on iPhones through ’17. While for ’15 we see 5M – 10M unit upside to Street of ~ 2227M, they believe the discrepancy becomes more pronounced in ’16 & ’17

2. iPhone (mix) should continue to drive GM upside through ’17

3. Opex $ leverage potential remains tremendously unappreciated, and Mar Q results demonstrate just how so.

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 $130.54 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS View