© Reuters. JPMorgan ‘Not as Worried as the Street’ on Apple (AAPL) Heading into Earnings

By Senad Karaahmetovic

JPMorgan analyst Samik Chatterjee has reflected positively on Apple (NASDAQ:) as companies prepare to report on their performance in the second quarter of the year.

Chatterjee took note of heightened concerns on the investor side for near-term estimates. However, the analyst sees “resilient” FQ3 estimates for Apple given that the company offered conservative guidance during the last earnings call.

“In our view, for F3Q (Jun-end), better supply dynamics (as evidenced through lead times) will overwhelm the modest demand weakness seen till date as well as the incremental FX headwinds (of about 150 bps y/y on top of the 300 bps headwind y/y already baked into guidance), with our forecasts for revenue/ earnings now largely in line with sellside consensus but better than buy-side expectations and sentiment,” Chatterjee said in a client note.

Still, the analyst moved “modestly” lower on the revenue and profit estimates to reflect (mostly FX) headwinds.

The price target has been maintained at $200.00 per share as Chatterjee, looking beyond this fiscal year, says:

“The modest headwinds to operating earnings from a slower macro are more than offset by the leverage of pricing power for better margin sustainability as well as better leverage of the balance sheet to repurchase shares.”

Hence, JPMorgan’s analyst remains bullish on Apple shares.

“We expect AAPL shares to be well positioned for outperformance within the coverage universe in the case of: 1) a recession – which will showcase resilient iPhone demand driven by replacement cycles as well as high contribution of earnings mix from Services; and 2) stabilization of macro – limited downside risk, with potential upsides from a rapid consumer rebound,” he concluded.

Apple is expected to report FQ3 at the end of July. The Street is looking for EPS of $1.15 on revenue of $82.68 billion.

Source link


Please enter your comment!
Please enter your name here