Analyst: Apple Suppliers See Higher-Than-Average Sales in March Quarter

Source: Thinkstock

Source: Thinkstock

Cantor Fitzgerald analyst Brian White reiterated a “Buy” rating and a $777 price target on Apple (NASDAQ:AAPL) shares in a research note issued on Monday. In the note, the analyst cited preliminary sales data from the firm’s so-called “Apple Barometer.” The Apple Barometer monitors the sales of various suppliers that provide components used in Apple’s products. According to White’s research note that was obtained by Apple Insider, Apple suppliers recorded a 34 percent month-over-month sales increase in March. White noted that this is higher than the average increase of 24 percent that the Apple Barometer has tracked over the past nine years.

On the other hand, Apple’s suppliers saw weaker-than-average sales in January and February. As a result, White is predicting that Apple’s quarter-over-quarter revenue will decline by 24 percent to $43.8 billion in the March quarter. According to the research note seen by Apple Insider, the seasonal average decline seen over the past eight years has been 19 percent.

However, White’s March quarter revenue projection is still higher than consensus estimates. The Street has Apple’s second fiscal quarter revenue pegged at $43.6 billion. Both estimates fall within the revenue guidance range of $42 billion to $44 billion that was provided by Apple in its last quarterly earnings report.

White made his assessment as he is touring Asia and having discussions with telecom and smartphone industry sources in the region. According to White’s previous research note obtained by Business Insider, the analyst “sensed disappointment” about iPhone 5S demand from carriers in China.

However, White also noted that the next-generation iPhones that are expected to have larger screens are already generating significant buzz in China. “That said, we heard great enthusiasm around the potential for Apple to introduce a larger iPhone form factor in China this year with the iPhone 6,” wrote White according to Business Insider. “In our view, the iPhone 6 with a larger screen (e.g., 4.7-inch, 5.5-inch) has the potential to meaningfully accelerate Apple’s growth trajectory in China during 2H:14. We have not heard this type of excitement in China around the iPhone in at least two years and thus we believe this could be a very special iPhone launch for Apple.”

“The common response we have been getting on our trip is that many consumers purchased a Samsung (SSNLF.PK) smartphone due to the larger screen but that they may switch to Apple’s iPhone if a larger screen (e.g., 4.7-inch, 5.5-inch) is available with the iPhone 6,” wrote White according to Apple Insider.

Apple is widely expected to unveil one or two new iPhone models with bigger screens later this year. Last month, The Wall Street Journal reported that one of the upcoming iPhone models will feature a screen size larger than 4.5 inches and that the other will have a phablet-sized screen larger than 5 inches.

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