Brean Capital Sees Upside to Apple (AAPL) EPS, Shares Back Above $130
Brean Capital analyst Ananda Baruah reiterated a Buy rating and $170 price target on Apple (NASDAQ: AAPL) following yesterday's event. The analyst said the new iPhone adoption initiatives are both progressive and pragmatic. The firm sees the stock back to $130 in the 2nd-half. They also see Sept and December quarter EPS upside.
Baruah commented, "Our current view is that AAPL could deliver Sep Q / Dec Q EPS of $2.00 & $3.29 (vs. Street of $1.87 & $3.19) on iPhone units of 47M and 72M and GM of 39.8% and 40.4% (Street at 39.3% and 39.8%). Furthermore, we believe that iPhone “tension” likely lies to the upside for our Dec Q estimate of 72M (we could see as high as 80M). That said, we believe the next true\elongated stock “move” will be determined by what CY16 iPhone ships can look like, and the Street likely won’t have view on that until April when AAPL reports the Mar Q. We continue to believe that Street numbers are materially low through ’17. Fundamentally speaking, we believe AAPL stands to deliver material EPS upside from 1) iPhone shipments through ’17, 2) favorable GM from both iPhones and iPhone mix (more 6 Plus’ than realized), and 3) materially more Opex $ leverage through at least ’16 as AAPL realizes the benefits from the recent iPhone 6 and iWatch investment cycles. Our $170 TP is 13x our ’17 EPS estimate of $12.73."
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Shares of Apple closed at $110.15 yesterday.