Apple: Color on Quarter
- AAPL +7.2% at three month high testing 200 day sma $103.70 premarket.
- Suppliers higher premarket: QRVO +4.42% SWKS +3.23% INVN +2.86%CRUS +2.45% AVGO +2.06% NXPI +1.59% JBL +0.93% TXN +0.70% QCOM+0.57%... SMH +0.8%, QQQ +0.8%.
- Raymond James upgraded AAPL to Outperform
- Mizuho notes Apple reported in-line F3Q revenues while EPS was modestly better. iPhone units were in-line with consensus while ASP was lower due to inventory drawdown activity. F4Q guidance came in better than consensus implying an uptick in iPhone shipments which was better than expected. They continue to see favorable risk/reward at current levels on potential upside to estimates through C2H16. Reiterating Buy rating and $120 PT.
- Maxim raises tgt to $173 from $168. They estimate ~10M iPhone SE units sold in the June quarter and majority to truly incremental users to the iPhone ecosystem. September quarter guidance slightly ahead of consensus, GM guidance is consistent with form factor change years. Their proprietary survey data points to AAPL being on the precipice of a multi-year investment upcycle.
- Cowen notes that with results/guide better than feared (consistent w/their preview), AAPL should act better NT. They are not fully out of the woods yet though; unless supply chain improves, they are hard pressed to see >70MM units for CQ4 meaning they would still view <$100 as a trigger level but want a FULL position by mid to late Fall as they are very bullish on '17 given a cool new phone in a massively aging base.
- RBC notes AAPL reacted positively to a modest beat and raise asinvestors gained comfort that FTM estimates aren't heading lower any further. iPhone units came in at 40.4M (while AAPL lowered 4M of channel inventory) and their guide implies iPhone units improving by ~10% q/q to ~44-45M range for Sept-qtr. Furthermore, the significant ASP drop in June-qtr (~$65 y/y) should also improve as they move forward into Sept-qtr with new product launches. Finally, they think gross-margins being stable/ahead of expectations despite a higher iPhone SE mix was incrementally positive for investors. Maintain OP and $115 target as they think the stock works higher given a confluence of iPhone 7 upgrade cycle and easier compares.
- Needham notes AAPL's fundamentals momentum should improve in FY4Q16 owing to the introduction of the iPhone 7, plus $400mm (their estimate) of Pokemon Go revenue at 100% margins, which they believe will allow faster EPS growth than guidance. AAPL's FY1Q17 should benefit from the Christmas sales cycle. In January 2016, AAPL stated that there were 1B active iOS devices in use. They calculate that this is growing by about 50mm annually. Cheaper smartphone models (like the iPhone SE) are attracting record levels of "switchers" from the Android ecosystem. Since their work calculates that iOS churn averages 15% annually (an 8-year iOS stay), this implies improving iOS ecosystem economics.
- Stifel: Better-than-Feared; Focus Shifts to Post iPhone 7 Upside Potential (+14% FCF Yield); $120 tgt