Has Apple Inc. (AAPL) Reached EPS Upside Exhaustion? Brean Capital Says No

Brean Capital analyst Ananda Baruah weighed in today with a favorable report on the tech giant Apple Inc. (NASDAQ:AAPL), pointing that the Street numbers are materially low through ’17. Fundamentally speaking, the analyst believes Apple stands to deliver material EPS upside from 1) iPhone ships through ’17, 2) favorable GM from both iPhones and iPhone mix (more 6 Plus’ than realized), and 3) materially more Opex $ leverage through at least ’16 as AAPL realizes the benefits from the recent iPhone 6 and iWatch investment cycles.


Baruah noted, “We believe that Jun Q iPhones are tracking to potentially 51M – 53M units, stronger than Street of 48M – 49M and in line to potentially stronger than some of the recent estimate revisions of 50M – 51M. We believe that AAPL’s implied unit guidance was ~49M units, so this would signify material unit upside to guidance. Additionally, we continue to believe that the mix of iPhone 6 Plus’ remains materially stronger.”

“Accordingly, we believe AAPL is driving to material Jun Q EPS upside of $1.83 – $1.95 (vs Street of $1.74). Specifically, our work suggests that Jun Q revenue, GM and EPS could be $51.2B – $52.5B (vs Street of $48.2B), 39.0% – 40.1% (vs Street of 39.4%), and EPS of $1.83 – $1.95 (vs Street of $1.74).”, the analyst added.

The analyst reiterated a Buy rating on Apple shares with a price target of $170, which represents a potential upside of 30% 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 Ananda Baruah has a total average return of 0.3% and a 49.6% success rate. Baruah has a -1.1% average return when recommending AAPL, and is ranked #2283 out of 3610 analysts.

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