Will an unexpectedly high ratio of low-end product offerings from Apple (NASDAQ:AAPL) decrease overall earnings? Susquehanna analyst Chris Caso believes that most analysts are underestimating the impact that Apple’s upcoming low-end devices will have on the company’s bottom line.
Based on his industry supply chain sources, Caso is reducing earnings expectations for next two Apple quarters. “We are lowering our Apple estimates to reflect our latest production checks, which indicate continuing mix challenges, and that current production won’t allow the new iPhones to be released before September,” said the analyst via StreetInsider.
Caso believes that the consensus estimates for Apple’s September quarter were optimistically based on the expectation that an iPhone 5S would launch in July. Now that the next iteration of iPhone is widely expected to debut in September, Caso believes that these “aggressive Street estimates” need to be reevaluated.
“We don’t think Street estimates fully reflect the higher mix of low-end devices indicated in our production forecast, and this mix drives our estimates below consensus for the July and September quarters,” stated Caso.
Due to the above reasons, the Susquehanna analyst is adjusting his estimates below consensus. June quarter consensus estimates are $35.19 billion for revenue and EPS of $7.41. Caso’s previous revenue and EPS estimates were already below consensus at $33.7 billion and $6.92. Now he is further reducing his forecast to $32.8 billion revenue and $6.64 EPS estimate.
Similarly, Caso has reduced his September revenue and EPS estimate from $37.7 billion and $8.11 to $35.7 billion and $7.38. September quarter consensus estimates currently stand at $38.01 billion revenue and $8.21 EPS. Caso also revised his 2014 fiscal year EPS from $47.30 to $46.71.
Susquehanna maintains a “Neutral” rating on Apple shares and a target price of $440, down from $480. Here’s how Apple has traded today.
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