RBC Capital Cuts Apple (AAPL) Estimates Amid FX Moves And Production Cuts

RBC Capital maintains Outperform on Apple (NASDAQ: AAPL), keeps price target of $125.00.

Analyst Amit Daryanani comments "Heading into Dec-qtr print, we have adjusted our Dec-qtr and FY17 revenue estimates to reflect currency headwinds resulting from USD strength since November, partially offset by local price increases and f/x hedges. Also, our Mar-qtr adjustments reflect incremental production cuts that we understand AAPL has implemented recently to better manage their channel inventory. Our Dec-qtr revenue estimate is reduced by ~70bps while EPS is lowered by ~0.05 vs. prior estimate. Notably, revenue headwinds for AAPL could create gross margin headwinds as a result of AAPL's USD-denominated costs, although hedges should partially offset some of the impact. Fundamentally, we remain positive on AAPL based on 1) potential for iPhone 8 super cycle, 2) continued growth in high-margin Services business, 3) new MacBook Pro product should revert Mac segment to y/y growth in CY17, 4) potential upside from Trump-onomics (taxes, cash repatriation), 5) attractive valuation (~8.5x EV/FCF).

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 $119.75 yesterday.

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