Analyst: Here’s Why Apple is Happy

All eyes are on Apple (NASDAQ:AAPL) this week as it follows the special media event on Tuesday with its September-quarter earnings report on Thursday. And according to Pacific Crest analyst Andy Hargreaves, the potentially good vibes following the product launch will tie in with largely positive financial numbers for the iPhone maker later in the week.

Hargreaves is projecting Apple to bring in $37.09 billion in revenue and $9.55 per share in earnings in the fourth quarter, much better than the consensus Wall Street estimates of $36.1 billion and $8.89 per share, respectively. Breaking it further down, the analyst expects Apple to have sold 28 million iPhone units in the quarter along with 15.6 million units of the iPad. According to Hargreaves, he is choosing to stick with the higher end of the consensus range of 26 million to 28 million iPhone sales in the quarter, but lowering expectations for the company’s tablet. Consensus estimates for iPad sales are between 16 million and 18 million units, according to the analyst.

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“While we see slight risk to iPad expectations, we remain comfortable with our fourth quarter iPhone estimate of 28 million and believe this will help drive quarterly revenue and EPS above expectations,” Hargreaves wrote in his note to investors, according to Barron’s.

The analyst is betting on a $299 starting price point for the iPad Mini and thinks the tablet may help Apple boost its overall margin to as high as 45 percent this quarter. “The Mini is a critical swing factor in many people’s unit estimates,” he added.

For the upcoming quarter, Hargreaves expects the smaller tablet to raise iPad sales to 25.5 million units, higher than the 23 million to 25 million consensus estimate. The analyst has an Outperform rating on Apple shares, along with a $760 price target.

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