This Is Why Apple Is Bullish On Q4 Sales (It’s Not The iPhone 8) | Stock News & Stock Market Analysis

The iPhone 8 smartphone could still be late to market despite Apple’s rosy sales forecast for the September quarter.The iPhone 8 smartphone could still be late to market despite Apple’s rosy sales forecast for the September quarter.Apple‘s (AAPL) iPhone 8 smartphone could still be late to market despite the company’s rosy sales forecast for the September quarter. So where’s the money going to come from?

JPMorgan analyst Rod Hall believes the sales upside in Apple’s outlook is from two new LCD-display smartphones, the rumored iPhone 7S series, not the flagship iPhone 8. He thinks the iPhone 7S handsets, upgraded versions of the current iPhone 7 series, will ship in September, as is usual for new iPhones. But the OLED-screen iPhone 8, or iPhone Pro, will ship in the December quarter, which starts Oct. 1, Hall said in a report Wednesday. He rates Apple as overweight with a price target of 176.

Investors now are discounting news reports that the OLED iPhone could arrive weeks later than normal and be seriously supply constrained at launch.

Apple stock was up 4.9%, near 157.40, in afternoon trading on the stock market today.

Apple stock received at least 19 price-target hikes from Wall Street analysts on Wednesday after the company’s beat-and-raise fiscal third quarter report late Tuesday. Of those, 16 were from analysts with buy ratings or the equivalent on Apple stock. Three were from analysts with neutral ratings and price targets of 146 to 150.

Drexel Hamilton analyst Brian White was the most bullish of the bunch, reiterating his buy rating and upping his price target to 208 from 202.

IBD’S TAKE: Apple stock has an IBD Composite Rating of 74, meaning it has outperformed 74% of stocks in key metrics over the past 12 months. For more information on Apple, visit the IBD Stock Checkup.

Apple’s fiscal third-quarter results came in above expectations thanks to better-than-forecast iPad sales and the company’s robust services business.

IPhone sales totaled 41 million units, up 2% year over year and in line with expectations during what is Apple’s seasonally weakest quarter for smartphone sales. Apple iPhone sales typically slow ahead of the company’s annual smartphone refresh, which historically occurs in September.

For Apple’s fiscal fourth quarter ending Sept. 30, the company expects sales to rise nearly 8% year over year to $50.5 billion, based on the midpoint of its guidance. Apple did not give an earnings-per-share target. Wall Street was modeling for Apple to earn $1.81 a share on sales of $49.21 billion.

Apple’s outlook implies that fears of an iPhone 8 delay or limited availability of the device “may be overblown,” Piper Jaffray analyst Michael Olson said in a note to clients.

“It’s worth noting that, during the June quarter, iPhone channel inventory was reduced to the lowest level in 2.5 years, leaving a clean channel ahead of the iPhone X launch,” Olson said. He rates Apple as overweight with a price target of 190.

BMO Capital Markets analyst Tim Long said Apple’s September-quarter guidance points to the company shipping a “premium iPhone Pro,” aka iPhone 8, alongside the standard “S” model refresh in September, “though initial volumes are likely to be extremely constrained.”

“We believe the key to the (September-quarter guidance) is the higher revenue, as it indicates expectations of a healthy start for the new launch,” Long said. He rates Apple as outperform with a price target of 180.

Apple’s fiscal fourth-quarter guidance implies sales of about 50 million iPhones, vs. consensus estimates of 46 million, Nomura analyst Jeffrey Kvaal said in a report. He rates Apple as buy with a price target of 175.

And its sales outlook did not settle the debate about the iPhone 8 launch, Bernstein analyst Toni Sacconaghi said in a report Wednesday. He rates Apple as outperform with a price target of 175.

“We see three possible scenarios … the most likely of which is that iPhone 8 (OLED offering) will be announced but is not available in September, and that Apple offers compelling new iPhone 7S devices, and potentially discontinues existing iPhone 7 and 7-Plus offerings,” he said. Sacconaghi rates the likelihood of that scenario happening at 50%.

In a second scenario, Apple would make the iPhone 8 available in limited quantities in September. He rates the likelihood of that happening at 40%.

The third scenario, with only a 10% probability, has Apple releasing the iPhone 8 in September in usual volumes for a new handset, Sacconaghi said.

Regardless of initial volumes, Apple is likely to see a surge of iPhone customers upgrading over the next four to eight quarters, he said.

Apple’s reassuring guidance is good news for its component suppliers.

Oppenheimer analyst Rick Schafer said chipmakers Broadcom (AVGO) and Skyworks Solutions (SWKS) are his top Apple supply-chain picks for the upcoming iPhone 8 cycle. He sees them gaining more content in the next-generation iPhone. Broadcom gets about 20% of its sales from Apple, while Skyworks gets about 40% of its sales from Apple, he said.

Broadcom was up 2.3%, near 254.10, and Skyworks up 0.3%, near 104.65, in afternoon trading.


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