Apple (AAPL) Margin Guidance Supports Bullish Thesis, BofA/Merrill Lynch Says
BofA/Merrill Lynch analyst Wamsi Mohan reiterated a Buy rating and $120 price target on Apple (NASDAQ: AAPL) following Q4 results while raising F15 revenue and EPS estimates to $221bn/$7.97 from $220bn/$7.86, respectively.
Mohan commented, "Gross margin guidance of flat (or up 50bps at the high end) vs a typical decline associated with the launch of new form factor products reinforces our thesis that the mix is gravitating strongly higher and should drive upside in revenues and gross margins. CEO Cook noted that there was significant demand over a longer time frame from first time iPhone buyers and from Android users converting to the Apple ecosystem. iPhone channel inventory is below the normal 4-6 weeks and given the increased complexity of the distribution channel 5-7 weeks will be the new target range, which should also drive incremental units over the next few quarters."
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Shares of Apple closed at $99.76 yesterday.