Analysts on Apple: Summer Doldrums and High iPhone 6 Costs

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Source: Thinkstock

Source: Thinkstock

Despite both maintaining an “Outperform” rating on Apple (NASDAQ:AAPL) shares, two analysts recently offered some words of caution about the Cupertino-based company’s iPhone sales. RBC Capital Markets analyst Amit Daryanani warned of a downturn in iPhone demand over the summer as consumers hold off for the expected iPhone 6 launch in September. However, Daryanani noted that the slowdown would only be temporary before one or two new iPhone models sparked another surge in demand.

“Our supply chain checks give us conviction that AAPL will launch a larger screen iPhone (iPhone 6) in fall this year, we expect it will be around the month of September. AAPL will potentially launch two new phones: A larger (~5+”) screen phone ($100 premium), a refreshed ~4” screen and likely keep 5s and 5c in production (but drop price by $100),” wrote Daryanani in a note to investors seen by Barron’s. “Near-term, we are concerned that June-qtr guide could be below expectations as we see an air pocket from a demand perspective.”

Based on the iPhone demand “air pocket,” Daryanani lowered his fiscal third-quarter revenue estimate to $36.7 billion from $37.1 billion. However, the analyst also raised his fourth-quarter revenue estimate to $42.1 billion from $39.5 billion and noted that updates to the iPad product line will further boost Apple’s second-half payoff. Daryanani characterized Apple as “an attractive value-play” and cited the upside from expected “new product categories” that CEO Tim Cook has referred to in several interviews. The RBC Capital Markets analyst reiterated an “Outperform” rating and a $590 price target on Apple shares.

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