Analyst Sees Positive Future for Apple (AAPL) Stock While Wall Street Awaits Q4 Earnings and Winter Guidance


At Apple (AAPL), it’s all about the long term. And the short term. That means it’s easy to find people who are upbeat about Apple’s ability to cement its leadership position in the premium smartphone market. But investors nevertheless have circled Thursday on their calendars —when Apple is scheduled to report fiscal fourth-quarter earnings after markets close. That’s when the tech giant watchers will once again obsess over quarterly growth, among other measures.

But it’s not the Q4 earnings keeping stock fiends in suspense, it’s Apple’s guidance for the December quarter, says Wedbush analyst Daniel Ives. Ahead of the print, Ives reiterates an Outperform rating on AAPL, along with a price target of $310, showing 43% potential upside. (To watch Ives’s track record, click here)

Ives says he’s read the tea leaves and things are positive for Apple’s future. The analyst believes this year’s models will be in demand even more than the 2017 iPhone 8/8 were. “Overall total revenues and EPS of $61.6 billion and $2.78, respectively, should be met with higher ASPs and a healthy services performance potentially driving a headline beat… we believe XR demand is handily exceeding the 8/8+ trajectory from the year ago and could now approach ~45% of iPhone units sold in FY19 vs our prior estimate of a 40% mix.”

Ives believes the XR model will be a linchpin for Apple’s success as 60-70 million iPhones in China will likely be upgraded. He explains how new models and new prices could affect the overall market: “With XR officially going GA this past Friday, investors are laser-focused on this mix shift with some lingering fears that the $749 base XR iPhones vs $1,000+ price points on XS/XS Max could negatively skew ASPs downward vs expectations. To this point we estimate 65% to 70% of XR sales will be the higher $899 price point model based on initial data points and coupled with strong XS/XS Max will drive ASPs toward the $800+ level and continue to push Street estimates higher for FY19 with current ASP estimates at $770.”

Wall Street mirrors Ives’ confidence in backing the tech player, with TipRanks analytics showcasing Apple as a Moderate Buy. Based on 36 analysts polled in the last 3 months, 25 rate a Buy on Apple stock. The 12-month average price target stands at $243.50, marking a nearly 11% upside from where the stock is currently trading. (See AAPL’ price targets and analyst ratings on TipRanks)

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