OK, Apple (AAPL). It’s officially earnings season again, and time to show investors what you’re made of. Apple is set to release fourth fiscal quarter results after the market close today. With shares of the iPhone maker climbing about 15% since it last reported in late July, now’s a great time to take a closer look at what we should expect.
RBC Capital’s top analyst Amit Daryanani believes Apple should post FQ4 results ahead of Street, based on multiple factors including new products, ASP uplift, benign memory costs, Services tailwind, and continued buybacks.
Daryanani noted, “Heading into Sept-qtr earnings, we think investor sentiment is neutral to even slightly negative toward new iPhones and AAPL’s ability to maintain flat to up units in FY19. We expect AAPL to post Sept-qtr results slightly above expectations driven by upside to iPhones (Units & ASPs) coupled with modest upside to GMs, and buyback tailwinds. The new iPhone launch will boost ASPs and units in Sept-qtr considering last year’s iPhone X’s delay should imply easier comps in Septqtr. Carrier promotions are more attractive this year, could be a driver of units upside. In addition, the Others product segment will surprise positively given rising Apple Watch and AirPods attach rate.”
Daryanani continued, “FX could be a slight headwind, AAPL’s hedging program should largely offset that. On the GM side, in addition to ASP dynamic, we should start seeing impact of lower memory prices flowing through, particularly with the launch of new iPhones. Services should continue to grow at a strong pace and we don’t think China gaming headwinds would cause a material impact on the segment (though we note compares are difficult y/y).”
Net-net, Daryanani reiterates an Outperform rating on Apple stock with a $250 price target, which implies a 14% from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amit Daryanani has a yearly average return of 18.6% and a 69.5% success rate. Daryanani has a 31.5% average return when recommending AAPL, and is ranked #67 out of 4895 analysts.
Other initial sentiment on the Street matches Daryanani’s bullish take, as TipRanks analytics exhibit AAPL as a Buy. Based on 34 analysts polled in the last 3 months, 24 praise Tim Cook’s empire, 9 remain sidelined, while only 1 is bearish. The 12-month average price target stands at $243.67, marking a nearly 11% upside from where the stock is currently trading. (See AAPL’s price targets and analyst ratings on TipRanks)