Sterne Agee Lifts Estimates on Apple (AAPL) Ahead of Important Q4 Report
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Rating Summary:
39 Buy, 25 Hold, 7 Sell
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Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
39 Buy, 25 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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Sterne Agee's Shaw Wu raised estimates on Apple (NASDAQ: AAPL) ahead of Sept. quarter this Thursday, October 25 after the market closes.
"Based on our supplier checks, we anticipate a modest revenue and EPS beat but believe guidance will likely be vintage conservative," Wu said. "The key reason being higher iPhone 5 quality control costs that AAPL will likely partially absorb. Despite near-term gross margin concerns, our fundamental view remains upbeat as we believe iPhone 5 and iPad mini will drive the industry's most powerful product cycle."
Wu sees iPhone units coming in at 27 million, which is better than the consensus estimates of 25-26 million units. "We believe investors have gotten overly pessimistic with demand and near-term component issues. As we have said before, our supply chain checks have indicated still robust demand trends despite Maps concerns and production capacity has improved due to better yields on in-cell touchscreens.
On the iPad, Wu believes consensus estimates of 17-18 million units are likely high and he is at 16.5 million. "The reason is that our supplier checks have indicated lower build plans ahead of iPad mini and a likely minor iPad refresh with an 8-pin Lightning connector." That said, Wu said Dec. quarter view is likely low and raised his forecast from 22.3 million to 25.5 million versus the consensus at 24-26 million.
The biggest swing factor is near-term gross margin. Wu sees gross margin at 40.5%-41.5%, below the Street at 42%-43%. "We see two issues," he said: (1) iPhone 5 manufacturing yields where AAPL will likely partially absorb higher costs
related to quality control where variance is measured in microns and (2) likely
lower margins on iPad mini (at least initially).
For the September quarter, Wu raised EPS estimates from $8.79 to $8.93, versus the consensus of $8.85. Revenues estimates remain at $36.6 billion, versus the consensus of $36.2 billion. For FY12, he raised EPS estimates from $44.25 to $44.39 and revenues remain at $157.1 billion, versus the consensus of $44.37 and $156.6 billion. For FY13, he raised EPS from $51.40 to $52 and revenues from $192.5 billion to $193.4 billion, versus the consensus of $53.27 and $193.9 billion.
Wu maintained a Buy rating and $840 price target on Apple.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple are up 1.7 percent today to $620.27.
"Based on our supplier checks, we anticipate a modest revenue and EPS beat but believe guidance will likely be vintage conservative," Wu said. "The key reason being higher iPhone 5 quality control costs that AAPL will likely partially absorb. Despite near-term gross margin concerns, our fundamental view remains upbeat as we believe iPhone 5 and iPad mini will drive the industry's most powerful product cycle."
Wu sees iPhone units coming in at 27 million, which is better than the consensus estimates of 25-26 million units. "We believe investors have gotten overly pessimistic with demand and near-term component issues. As we have said before, our supply chain checks have indicated still robust demand trends despite Maps concerns and production capacity has improved due to better yields on in-cell touchscreens.
On the iPad, Wu believes consensus estimates of 17-18 million units are likely high and he is at 16.5 million. "The reason is that our supplier checks have indicated lower build plans ahead of iPad mini and a likely minor iPad refresh with an 8-pin Lightning connector." That said, Wu said Dec. quarter view is likely low and raised his forecast from 22.3 million to 25.5 million versus the consensus at 24-26 million.
The biggest swing factor is near-term gross margin. Wu sees gross margin at 40.5%-41.5%, below the Street at 42%-43%. "We see two issues," he said: (1) iPhone 5 manufacturing yields where AAPL will likely partially absorb higher costs
related to quality control where variance is measured in microns and (2) likely
lower margins on iPad mini (at least initially).
For the September quarter, Wu raised EPS estimates from $8.79 to $8.93, versus the consensus of $8.85. Revenues estimates remain at $36.6 billion, versus the consensus of $36.2 billion. For FY12, he raised EPS estimates from $44.25 to $44.39 and revenues remain at $157.1 billion, versus the consensus of $44.37 and $156.6 billion. For FY13, he raised EPS from $51.40 to $52 and revenues from $192.5 billion to $193.4 billion, versus the consensus of $53.27 and $193.9 billion.
Wu maintained a Buy rating and $840 price target on Apple.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple are up 1.7 percent today to $620.27.
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