Apple (AAPL) Gains as Analyst Sees iPhone Units About 5M Above the Street

Apple (NASDAQ: AAPL) is solidly higher Thursday (+0.7%) ahead of Friday's official Apple Watch launch (04/24), earnings next week (04/27) and amid bullish comments from Stifel analyst Aaron Rakers.

In a note to clients today, Rakers raised his iPhone estimates ahead of the company’s upcoming earnings release. The firm is now estimating 59.6M iPhones in F2Q15, up from the prior 53.6M estimate (street: 54.9M).

The analyst believes Apple’s iPhone results within China represent the most significant swing factor in upside for the March quarter.

He commented:

"Apple reported a 2x yr/yr increase in iPhone sales in China during the December quarter. Gartner (sell-thru) and IDC (sell-in) estimated Apple’s iPhone shipments at ~13.5M and ~13.2M iPhones in C4Q14, respectively. Apple had reported it did not attain supply/demand balance until January, we believe leaving us to consider channel fill impacts during the March qtr, especially within China as we continue to see strong 4G TD-LTE adoption (see below). Apple’s total iPhone channel inventory had declined by ~200k seq. during F1Q15 vs. +1M seq. in F1Q14 – the first seq. decline seen in +5 yrs. Apple’s has seq. increased its iPhone channel inventory during the March quarter in each of the prior four years (avg. +1.35M units). Our analysis of various data points leaves us to consider low/mid-teens yr/yr iPhone growth in developed countries. We are leaving our Mac, iPad, and other estimates unchanged."

The analyst raised F2Q15 estimates from $54.4M/$2.06 to $58.4M/$2.26; F2015 estimates move from $227.2B/$8.61 to $231.2B/$8.81. They maintain F2016 and F2017 estimates at $248.9B/$9.24 and $259.2B/$9.26, though we note that GM% and share repo represent key upside considerations.

The firm maintained its Buy price target of $150 into the print.

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

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