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The Axe on Apple (AAPL) Expects Earnings To Be A Non-Event

July 25, 2016 9:00 AM EDT
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Price: $173.72 +0.64%

Rating Summary:
    40 Buy, 24 Hold, 7 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Piper Jaffray analyst, Gene Munster, maintained his Overweight rating on shares of Apple (NASDAQ: AAPL). The analyst expects Apple's Jun-16 quarter/Sep-16 guide on Tuesday 7/26 to be a largely neutral event for the stock because buy-side expectations are low for iPhone and the overall business. If Apple reports an in-line quarter and guides down slightly (~5%), which seems to be buy-side thinking, the stock would likely drift higher, although not move significantly. Bigger picture, the expectations for the iPhone 7 remain extremely low, thus any potential "wild card" improvements would be a meaningful positive for shares in September. Even an in-line iPhone 7 still leaves the stock facing easy comps in Mar-17 and Jun-17 with growing expectations for the 10th anniversary iPhone, either 7S or 8, in 2017.

The most likely scenario is that Apple guides Sept-16 to $43-45 billion in revenue, which would imply around 41-42 million iPhones, and gross margins to 37-38%. We note the iPhone 7 launch could impact the September quarter guide given Apple's demand expectation and channel fill plan.

The analyst surveyed 20 buy-side investors to generate a consensus for expectations. He believes the buyside is expecting Sept revenue guidance of $44.5 million and 41 million unit shipments. Both of these figures are below consensus and imply low expectations.

No change to the price target of $153.

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 $98.66 yesterday.



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