Apple (AAPL) Gains on Solid December-Qtr iPhone Projection; RBC Views as 'Positive'
May 23, 2016 1:25 PM EDT
Apple (NASDAQ: AAPL) is seeing solid gains Monday (+1.6%) following a report from Economic Daily
suggesting initial iPhone builds for the December quarter are set for 72-78M iPhones. This compares
favorably to the consensus expectation of ~65M initial production for the new iPhone, RBC Capital
analyst Amit Daryanani noted. Further the article stated, Apple will release three new phones (iPhone 7,
iPhone 7 Plus, and iPhone 7 Pro/Premium) on September 13. The report also noted that due to the
large demand for initial build, Foxconn has started recruitment efforts for workers.
"We think initial indication of flat production (y/y) is a positive data point given investor apprehension that
AAPL units could be down mid to high single digits through the iPhone 7 cycle," Daryanani.
"While there are plenty of variables still to be sorted through, given the high degree of negativity around
AAPL we think initial indication of flat production (y/y) is a positive data point given investor apprehension
that AAPL units could be down mid to high single digits through the iPhone 7 cycle," he added. "We remain
positive on AAPL as we think gross-margins should improve over the next several quarters driven by mix
optimization, ramp headwinds moderating and possible f/x benefits. Furthermore, we see iPhone compares
improving over the next few quarters providing further tailwinds for AAPL. "
The firm maintained an Outperform rating and $120 price target on AAPL.
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