Cowen Boosts Q1 Ests on Apple (AAPL) Ahead of Report; Comments on 2015 Product Outlook

Cowen and Company issues commentary on Apple (Nasdaq: AAPL) ahead of the company's Q115 report, which is expected out on January 27, 2015.

Analyst Timothy Arcuri is boosting his Q1 revenue and EPS outlook to $67.3 billion and $2.58, respectively. The analyst sees iPhone sales at 68 million units and iPad units of 17 million. While this iPhone number is not exceedingly above current expectations, we note it is up ~33 percent Y/Y. Relative to mix, we estimate 6/6+ represents ~59 to 60 million of the overall iPhone units but 6+ availability improved significantly in December bringing the relative ratio to ~80/20. On mix, we estimate 64GB to be ~65 to 70 percent of total units - margin accretive for AAPL given ~80 percent incremental drop-through for the upsell from 16GB to 64GB. This would suggest GM remains biased to upside relative to ~38 percent mid-pt and we would not be surprised to see 38.5 to 39.0 percent, the analyst said.

New product outlook for calendar 2015: Our field work continues to suggest two versions of Apple Watch will launch in March with an initial supply in the 20 to 25 million/yr run-rate. We continue to see a 2.0 Watch version launched with iPhone 6S later this year which we think likely includes captive connectivity (eliminating the tethering required for 1.0) and a dramatically more leading edge apps processor. We continue to see the 12" iPad (ultimately a 2-in-1) still on track for June. Relative to iPhone, 6S specs remain unclear but we do expect the force-touch controller to be added to the iPhone line, adding a dimension of "depth" to iPhone screens for the first time. Lastly, we continue to see evidence of a 3rd "new" screen size with the new iPhone 6 design elements on a 4" screen version with specs similar to iPhone 5S, more of a low-cost "mini" version of iPhone.

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

Apple closed at $110.22 yesterday.

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