Apple (AAPL) Q4 Report/Outlook 'Somewhat Comforting', Susquehanna Says

Susquehanna analyst Chris Caso maintained a Positive rating and $155 price target on Apple (NASDAQ: AAPL) following Q4 results after the close. Caso said the report and guidance was "somewhat comforting amid reduced expectations heading into the quarter."

Caso commented, "AAPL’s report and guidance was somewhat comforting amid reduced expectations heading into the quarter. Notably, the company does expect Y/Y iPhone revenue and unit growth in the December quarter despite last year’s difficult compares, and margins held up well despite the introduction of the new phone. We do expect consensus estimates to come down, however, with revenue guidance slightly below consensus, and we expect consensus EPS to move slightly lower due to higher opex, but we believe investor expectations had already come down into the report. Looking forward, we expect investor concerns to now shift to March-quarter iPhone units, for which we don’t expect much visibility until December. But beyond the tension between near-term numbers and expectations, we think the report demonstrates that there’s nothing wrong with iPhone aside from some tough compares. AAPL is still managing to demonstrate exceptional constant-currency revenue growth relative to its valuation, which we think results in a favorable risk/reward at current levels."

The firm's December-quarter estimates move to $76.5 bln/$3.17, from $73.2 bln/$3.05 previously. They have increased iPhone estimate slightly to 75 mln units (they had trimmed to 74 mln from 79 mln coming into the report), so they are increasing it back up a little, though not significantly. They have also adjusted expected ASP on the iPad Pro (we were simply too low). They estimate the iPad pro represents $4.3 bln in incremental revenue for AAPL in the December quarter (assuming 4.5 mln units at $950 ASP), which helps to bring total iPad revenue to about flat Y/Y.

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 $114.55 yesterday.

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