“Two key analysts are making a cautious note on one of the most popular stocks out there that is reporting early next week,” Chris Lange writes for 24/7 Wall St. “Apple Inc. is that stock, and although Merrill Lynch and Oppenheimer are not going completely bearish on it, they are still thinking that these earnings could be relatively soft.”
“Merrill Lynch is continuing to model 50 million iPhones for March and 44 million for June,” Lange writes. “The brokerage firm is adjusting its mix to reflect the demand for the SE version that has a lower average selling price (ASP) and gross margin… As a result, the firm reiterated its Buy rating (but lowered its price target to $125 from $130) on the potential of a strong iPhone 7 cycle, and optionality afforded by a large cash balance to enter new addressable markets.”
MacDailyNews Take: Ooh, “optionality.” Yum!
“The Outperform rating on Apple from Oppenheimer reflects a solid outlook for the flagship iPhone products. While overall smartphone market growth has slowed in recent years, the brokerage firm sees good opportunities for Apple to gain market share in both developed and emerging markets due to its significantly superior user experience, human-computer interface and premium branding,” Lange writes. “Oppenheimer also believes Apple’s ecosystem is stronger than ever and provides increasing appeal to mobile device consumers. Apple’s substantial capital return program should offset the potential downside from slowing iPhone sales growth in coming years.”
Read more in the full article here.
MacDailyNews Take: Again, this quarter is the toughest compare with the pent-up and therefore outsized iPhone 6/Plus unit sales of last year. Everyone in-the-know expects there to be an iPhone units sales decline this quarter. The second half of the year should look better than the first.
Apple investors brace for first-ever iPhone unit sales decline – April 22, 2016