As October comes to a close, Apple is poised to close out its fiscal 2015. The tech giant will post its September quarter earnings on October 27, after the closing bell. The Street expects the tech giant to report adjusted EPS of $1.9, based on revenues of $51 billion.
Munster believes that one of the biggest questions around the stock is how iPhone growth will fare against difficult iPhone 6 comps starting in Dec-15. He noted, “Based on conversations with 15 investors over the last week, we believe that expectations are for iPhones to be down slightly y/y in Dec-15. However, we continue to believe that the iPhone 6S cycle will be not as bad as investors expect and remain comfortable with our thinking for 2% y/y iPhone growth in Dec-15. For 2016 6S cycle we are modeling for iPhone unit growth of 3% vs. the Street at 2%.”
Furthermore, “There are two new products to consider for Dec-15 earnings. First, the Apple TV is set to begin pre-orders next week, thus we will have two months of Apple TV sales in the Dec-15 quarter. We believe that demand will be high given this is the first meaningful update of Apple TV in over three years. We believe that Apple sold around 5 million Apple TVs over the last year at a sub-$100 price point vs the $149 starting price for the new TV. For the iPad Pro, which we expect to begin selling in early November, if you assume Apple sells 2 million iPad Pros in Dec-15 (we expect 18 million total iPads), we believe it could add about $700 million in incremental revenue.”
Munster reiterated an Overweight rating on Apple shares, with a price target of $172, which represents a potential upside of 49% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gene Munster has a total average return of 22.5% and a 68% success rate. Munster has a 26% average return when recommending AAPL, and is ranked #1 out of 3801 analysts.
Out of the 50 analysts polled by TipRanks, 34 rate Apple stock a Buy, 14 rate the stock a Hold and 2 recommend a Sell. With a return potential of 27%, the stock’s consensus target price stands at $147.02.
Munster reiterated an Overweight rating on shares of Google parent Alphabet, while raising the price target to $812 (from $723), following the company’s third-quarter results, which were solid as gross advertising revenue and EPS beat consensus. GOOGL shares reacted to the positive earnings, rising 8.85% to $709.51.
Munster wrote, “Shares of GOOG are up meaningfully in the aftermarket post Q3 earnings for two reasons. First, the company announced a $5.1 billion repurchase plan that was not expected by investors. This is the second straight quarter where Google introduced some more investor friendly policies. Last quarter the company talked about the potential for more focus on expenses. Next quarter, the trend will continue as the company breaks out Google from the company’s “other bets.” Second, mobile drove accelerating click growth via improved ad relevance and ad products. Overall, we expect GOOG to continue to benefit in the near-term from the more shareholder friendly policies.”
According to TipRanks.com, Munster has a 21.4% average return when recommending GOOGL. Out of the 45 analysts polled by TipRanks, 41 rate Alphabet stock a Buy, while 4 rate the stock a Hold. With a return potential of 10%, the stock’s consensus target price stands at $747.24.
Out of the 45 analysts polled by TipRanks, 41 rate Alphabet stock a Buy, while 4 rate the stock a Hold. With a return potential of 10%, the stock’s consensus target price stands at $747.24.