“A rise in margins has raised hopes that Apple Inc may be able to hold the line on pricing ahead of the launch of new iPhones later this year,” Supantha Mukherjee reports for Reuters. “Apple’s shares rose 3.3 percent to a 22-month high of $97.88 on the Nasdaq on Wednesday.”
“At least six brokerages raised their price targets on the stock by as much as $12 to a high of $123,” Mukherjee reports. “Apple’s gross margin rose to 39.4 percent in the third quarter from 36.9 percent a year earlier, and the company forecast current-quarter margins of 37-38 percent.”
“‘With (gross margins) stabilizing (year-on-year) and core demand trends solid, we think investors will want to own Apple stock (going) into bigger-screen iPhone 6 and ecosystem-expanding iWatch/iBand launches,’ Evercore Group analysts wrote in a note,” Mukherjee reports. “Analysts expect a staggered launch of new iPhones, with a 4.7-inch flagship launching late September, followed by a 5.5-inch phablet around November. ‘We believe that a larger screen iPhone, combined with Apple’s strength in software and ecosystem, will be well received in the market and will drive unit growth,’ BMO Capital Markets analysts wrote in a note.”
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