Cowen, an investment bank, expects Apple’s June quarterly results to be in line with Wall Street’s forecasts, adding that Apple’s services and the upcoming 5g iPhone 12 will boost the company’s future momentum. In a note to investors seen by Appleinsider, analyst Krish Sankar said Apple’s strong position stems from the upcoming “iPhone 12” product, which is the catalyst for profits in 2021; compared with hardware products, the service sector remains resilient; and during the outbreak of the coronavirus, the company’s free cash flow remains strong.
Apple will hold its third quarter earnings report and investor conference call on Thursday, July 30, at 2:00 p.m. Pacific time (5:00 p.m. Eastern time). The analyst said Apple may not provide guidance for the September quarter, but the fact that it owns Apple shares is for long-term service and the growth opportunities of the upcoming 5g phone product.
Krish Sankar said the service sector was still a bright spot and MAC demand was likely to grow during the back to school period. Apple’s sales will grow 23% from the previous quarter and total iPhone shipments will reach 40 million units, the analyst said.
for the quarter as a whole, the analyst forecasts revenue of $50.18 billion, including $13.2 billion in service revenue and $21 billion in iPhone revenue, which is basically consistent with the consensus of Wall Street. Analysts tracking Apple’s sales forecast, on average, that the company’s sales in the conference call will reach $51.47 billion. In contrast, the second quarter of 2020 was $58.3 billion, although Apple traditionally had its weakest quarter of the year.
Cowen said Apple had about $93 billion left in its current stock repurchase plan. Krish Sankar estimates that for the rest of 2020, repo trends will be $10 billion per quarter. Krish Sankar forecasts that iPhone shipments will fall by 12% in 2020 from a year earlier. But given the expected strength of the iPhone 12 and 5g, Krish Sankar believes Apple’s sales in fiscal 2021 will increase by 20% over 2020.
Cowen’s 12-month AAPL target price remained unchanged at $400, which was increased from $335 in June. The target is based on a mixed multiple of 25 times and a 2021 EPS rating of $15.78. AAPL shares rose 1.83% in intraday trading to $377.18 on NASDAQ on Monday morning. Apple shares have risen 3.64% since the beginning of July.