Analyst: Why So Negative on Apple?
Apple’s (NASDAQ:AAPL) ecosystem was the best in class and the investment community had turned needlessly negative on the company’s demand and gross margin outlook, ISI Group analyst Brian Marshall said. Marshall also reiterated a Buy rating and a $710 price target on the stock ahead of the release of Apple’s fiscal first-quarter earnings report on Wednesday.
For December, Marshall predicted $52.3 billion in revenue and $12.75 per share in profit, based on sales of 48 million iPhones and 19 million iPads. Wall Street consensus is for revenue of $54.9 billion and earnings of $13.47 a share, according to FactSet estimates. His fairly high iPhone estimate of 48 million received some backing from Verizon (NYSE:VZ) earnings data on Tuesday. The wireless carrier said it activated 6.2 million iPhones during the December-ending quarter, almost half of which were the newly launched iPhone 5.
“We view this as a solid number supportive of our estimate of 48 million total iPhones,” Marshall had written then. In addition, for the ongoing quarter, the analyst expected Apple to bring in $46.5 billion in revenue and $12.32 per share in earnings on sales of 45 million iPhones and 16 million iPads.
On Wednesday, Marshall added that he was on lookout for signs that Apple’s gross margins had bottomed with the iPhone 5 launch and could now stabilize in the low 40 percent range for the current calendar year.
“In addition, investors will be looking to gain visibility on the iPhone/iPad demand outlook and potential impact of competitive pressures (e.g., Samsung, etc.),” he wrote, according to Barron’s. “Net-net, the iPhone/iPad families have plenty of runway to increase penetration internationally, the Street has become overly negative and Apple’s ecosystem remains best-in-class.”
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