Should Apple Inc. Investors Hit the Panic Button Ahead of FQ1:18 Earnings?

GBH Insights' Daniel Ives not only predicts strong upside for the FQ1:18 showcase, but likewise bets new iPhone releases can swing customers away from the fence.


By the time February 1st rolls around, Apple Inc. (NASDAQ:AAPL) investors will be anxious to see Apple’s first fiscal quarter performance for 2018, and what the second fiscal quarter guide has in store- particularly following supply chain check buzz from Asia pointing to iPhone shipments that could underwhelm. Worries are spreading like wildfire that Apple could be guiding meaningfully under forecasts for its second fiscal quarter.

However, GBH Insights analyst Daniel Ives weighs in with high expectations for robust results from the tech titan during its first fiscal quarter showcase of the new year.

True, the analyst acknowledges what has blown into “full panic mode,” sentiment that has been “neutralizing the positive news from a December all around beat likely on deck.” However, he tells investors “it’s time to take a deep breath here,” finding that the company’s “monster product cycle thesis out of Cupertino is delayed/elongated rather than gone.”

Therefore, ahead of the print, the analyst reiterates a Highly Attractive rating on AAPL stock with a $205 price target, which implies a 20% upside from current levels. (To watch Ives’ track record, click here)

For fiscal 2018, the analyst no longer looks for 255 million in iPhone shipments, scaling his estimate back to 240 million. However, Ives continues to make a bullish case all the same. Keep in mind, the analyst argues: “we believe the combination of stronger than expected ASPs, a ‘push out’ of roughly 15-20 million iPhones from FY18 into FY19, repatriation/buyback tailwinds, multiple device launches on the horizon, and a China growth story which is showing signs of renewed growth prospects (albeit with some soft spots) gives us confidence that Apple will be able to navigate near term headwinds and emerge a stronger fundamental story exiting 2018.”

For the first fiscal quarter of 2018, the analyst is still more positive than the Street, expecting between 81 and 82 million iPhone unit shipments against consensus of 79 million. Take under account a jump in average selling prices (ASPs) with the more expensive iPhone X, the analyst calculates stellar upside for the quarter.

It is all about recognizing “the forest through the trees,” and as far as Ives is concerned, he spots a real “window of opportunity” ahead for the company: iPhones in the ballpark of 350 million units waiting for an upgrade looking at the forthcoming year to year and a half. Meanwhile, Ives predicts three new iPhone releases to be “staggered” in the next half a year to 9 months, which should help the company grab at lurking demand for consumers not ready to spring for the iPhone 8, 8+, or X. Perhaps the next smartphone will “catalyze fence sitting iPhone customers” for the Apple machine.

In a nutshell, “While this is a hand holding period, we believe near term turbulence does not change our long term bullish thesis on Apple and the underlying demand/upgrade drivers for the next 12 to 18 months remain intact,” Ives concludes.

TipRanks suggests a mostly positive analyst consensus backing this tech titan’s empire, with 22 out of 31 analysts of the last 3 months rating a Buy and just 9 maintaining a Hold on AAPL stock. With a return potential of nearly 14%, the stock’s consensus target price stands at $194.36.

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