Are All Eyes Really On Apple Inc. (AAPL) Earnings Today?

When it comes to the movie playing for Apple Inc. (NASDAQ:AAPL), every analyst on the Street is antsy to skip the earnings trailer straight to the feature attraction: the iPhone 8 cycle. The tech titan’s forthcoming 10th anniversary edition has been causing a sensation for months before the buzziest iPhone model’s launch has even seen the light of day. While third fiscal quarter earnings are unveiled this evening once the bell tolls, here’s what analysts are saying about the tech titan- and why the tilt of Apple’s risk vs. reward hangs in the balance of the rumored-to-be flashiest iPhone to date:

In one crossing stands Mizuho analyst Abhey Lamba, who believes upcoming quarters will reap the advantage of Apple’s fiercely devoted users and the compelling upgrade prospect presented by the new iPhone model. However, Lamba remains evenly middle-of-the road in his enthusiasm on the titan, assessing the value of the stock to already factor in the future success of the “iPhone X” release. Most are keeping their eyes and demand pent-up until the key debut, and Lamba sees both the good weighing in Apple’s favor, as well as the challenges embedded in its golden path ahead.

Ahead of the print, the analyst reiterates a Neutral rating on shares of AAPL with a $150 price target. (To watch Lamba’s track record, click here)

For the fiscal third quarter, the analyst projects total revenues between $44.5 and $45.0 billion, compared to guidance calling for a range between $43.5 and $45.5 billion, as well as consensus of $45 billion. Lamba predicts, “We expect iPhone shipments of ~40-41mm vs. consensus of 41mm, while ASPs could be around $615-625 (down sequentially) due to demand tapering at the high-end in anticipation of the upcoming launch.” Meanwhile, the analyst would not be surprised if gross margin climbs the high-end of guidance ranging between 37.5% and 38.5%, which aligns with consensus expectations. Lamba sets EPS expectations between $1.55 and $1.58, bracketing consensus of $1.57.

“While the team still expects production to start in mid-September, it lowered its CY17 OLED production forecast by double-digits on the back of ramp issues,” continues the analyst, elaborating, “However, the shortfall is likely to made up by higher builds of the current lineup. In all, we believe the device is likely to be significantly supply constrained at launch, though, we expect robust demand within the installed base.”

Moving forward, “We acknowledge that future quarters are likely to benefit from n-t supply-demand imbalances, loyal customer base and a large upgrade opportunity. That said, we continue to believe the current valuation captures the upcoming growth cycle. Our LTVC analysis suggests balanced risk-reward as well,” asserts Lamba.

BMO analyst Tim Long echoes the sentiment of Lamba and most analysts on the Street, waiting for the iPhone cycle beyond the call this evening- albeit from a more bullish light.

In his earnings preview, the analyst approaches the titan from a vantage point of long-term confidence, maintaining an Outperform rating on AAPL stock with a price target of $170, which represents a just under 14% increase from current levels. (To watch Long’s track record, click here.)

When Long assesses the Apple picture, the center of it all boils down to the iPhone, as he notes, “We believe the stock is less about June results, and while September guidance will be somewhat important, the key near-term catalyst will be the iPhone announcement expected for September.”

For the fiscal third quarter, the analyst is more bullish than the Street on revenues to the tune of $100 million plus, but $0.02 shy of the Street on EPS expectations, pointing to a “slightly lower margin view.” Regarding iPhone units, the analyst forecasts 41 million, right in line with consensus, and ASP outlook of $626, a bit ahead of consensus of $621. For the fourth fiscal quarter, the analyst is betting $400 million more on revenue than the Street, and $0.05 higher when projecting EPS.

For fiscal 2017, the analyst calls for EPS to hit $8.90, more confident than consensus of $8.86, and for fiscal 2018, the analyst expects EPS to jump up to $10.89, above consensus of $10.59.

Ultimately, “We continue to believe Apple will introduce a premium iPhone ‘Pro’ model with an edge-to-edge OLED display alongside the standard ‘S’ refresh in September. We believe the models will be announced and available for order or pre-order simultaneously, although the limited production ramp for the OLED version will mean lower shipment volumes in September. We believe production capacity will continue to ramp throughout the December quarter, with stock-outs continuing into the first half of CY2018. Following some checks and reinforced by our model’s indications of a favorable setup going into this launch cycle, we believe demand for the premium model will be strong. We model shipments of 43 million from the premium iPhone in the first four quarters of availability,” Long surmises.

For now, though the third fiscal quarterly print is on the brink of delivery, the Street cares about just one thing: the iPhone 8 cycle, and how its growth will spur Apple shares forward.

How does the rest of the investor-verse measure up the big Apple? It would appear this stock is one largely for the bulls, considering TipRanks analytics demonstrate AAPL as a Strong Buy. Out of 34 analysts polled by TipRanks in the last 3 months, 26 are bullish on Apple stock while 8 remain sidelined. With a return potential of nearly 11%, the stock’s consensus target price stands at $164.93.

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