Apple's Near-Term iPhone SE Strength Offsets 6s/6s Plus Weakness
By Monica Gerson , Benzinga Staff Writer - July 15, 2016 7:32am
Apple Inc. AAPL is scheduled to report its F3Q16 results on July 26. Credit Suisse’s Kulbinder
Garcha maintained an Outperform rating on the company, with a price target of $150, saying
Apple should be able to sustain “elevated levels” of earnings and FCF in the long term.
The Credit Suisse revenue and EPS estimates for F3Q16 are $41.2 billion and $1.39, versus consensus
expectations of $42.3 billion and $1.38, respectively. “Given high retention rates, a superior ecosystem,
and multi product compute advantage, we believe such elevated levels of earnings and FCF of ~$65bn
should be sustainable long term,” Garcha wrote.
iPhone SE Strength Offsetting 6s/6s Plus WeaknessSupply chain checks indicate near-term iPhone SE
strength would likely offset softness in the remaining iPhone portfolio. Garcha projected iPhone SE units
of 10 million for the quarter. He expects total iPhone units to come in at 40.7 million, representing a 14.4
percent year-over-year decline and a 20.5 percent sequential decline. Results are likely to have been
impacted by an inventory drawdown.
The unit estimate for 2016 is at 207mn, representing a 10.8 percent year-over-year decline. The iPhone
cycle is likely to remain subdued for the next few quarters, the analyst mentioned. He expects the iPhone
business to recover slightly to 215 million in 2017, and accelerate to 250 million in 2018.
“Specifically, we believe installed base growth, which has grown 80% since 2013, should drive unit growth
beginning with the iPhone 7,”
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