Apple Inc. (NASDAQ:AAPL) shares have fallen approximately 12% since reporting its June results, as performance measures were below Street expectations. Wall Street Analysts were expecting sales of between 14 million and 15 million iPads for the quarter, and 35-36 million iPhones. The big disappointment here came in the form of iPad sales, which fell for a second consecutive quarter: iPad sales came at 13.28 million units, missing the expected mark and coming at a decline of 9.2% from the 14.6 million iPads shipped in the same quarter a year prior. Street analysts also estimated revenue to hit $37.9 billion, which is slightly higher than the $37.4 billion that Apple actually earned in that quarter (although still a record revenue).

That said, investors have multiple concerns: potential macroeconomic problems in China with worrying growth prospects, slowing momentum for iPhone 6 and 6 Plus product cycles, and an uncertain demand for the Apple Watch. FBR’s report also considers other risks, such as  increasing competition from the likes of Samsung, Google, and Microsoft, which could result in falling market share and revenue growth. Apple’s success is also highly susceptible to the overall macroeconomy and any technological change in the industry.

However, FBR analyst Daniel Ives maintained an Outperform rating and $175 price target, noting factors such as “a host of growing new products/services (e.g., Apple Music, streaming TV possible later this fall, Apple Pay)”. Additionally, analyst Daniel Ives centres around two key points: the huge greenfield market opportunity that China represents and tough iPhone comparables.

Ives notes that, despite macroeconomic problems in China, Apple’s “white-hot momentum” should continue in the next few quarters given a) low levels of penetration at approximately 15% market share b) growing demand for Apple’s App Store c) other opportunities across the Apple ecosystem. In terms of tough iPhone comparables, Ives emphasizes the huge strides that iPhone 6 and 6 Plus sales have made over the past year and maintains that investors have expressed similar sentiments about product cycles in the past (e.g. with the iPhone 5), which proved not to be of concern. More than 70% of iPhone users are yet to upgrade to the iPhone 6/ 6 Plus, and this dynamic could occur in line with the expected release of the iPhone 6s/ 6 Plus later this year.

In addition, the FBR Report also includes Ives’ thoughts on “debatable points” facing Apple. One such point is the future of Apple Watch as a device in the category of “wearables”; Ives believes that the release of the Apple watch has unleashed great potential for the wearables market, “given the Apple brand/ unmatched consumer base”. Another point raised in the report is Apple’s ability to maintain its “solid execution/growth” given its size. FBR acknowledges that 55% of revenue comes from Apple’s iPhone sales which remain “vulnerable to fickle consumer preferences”, but emphasizes the power of Apple’s “tightly integrated software ecosystem and services segment”.

Lastly, Ivesconsiders Apple’s capital allocation strategy, considering how Apple “raised its massive capital return program from $130 billion to $200 billion through March 2017 given a dividend increase and larger share repurchase authorization.” Ives concludes, “With over $65 billion in free cash flow anticipated for FY15, we believe there is room for more in coming years.”

Therefore, although Apple is apparently now a “battleground stock” following June results, FBR’s Daniel Ives is bullish and maintains Outperform rating.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Daniel Ives has a total average return of 9.1% and a 63.1% success rate. Ives has a -9.1% average return when recommending AAPL, and is ranked #357 out of 3762 analysts.