Neil Hughes
Gross margins for Apple's March quarter could surprise to the upside, according to investment firm RBC Capital Markets, which raised its price target on the iPhone maker to $142 on Tuesday.
Analyst Amit Daryanani sees a variety of factors contributing to the margins, which he expects will hit 39.5 percent this quarter. Specifically, he cited yield efficiency, supply chain pricing, and strong sales of the iPhone 6 Plus helping to push margins higher.
In addition, Daryanani sees multiple factors on the horizon that could further improve Apple's margins, including the ramping of production of the Apple Watch in the June quarter.
He also believes that the anticipated launch of an "iPhone 6s" series in September could lead to further upside. It's expected that this year's iPhone upgrade will feature the same general design as the current iPhone 6 lineup, allowing Apple to improve gross margins.
For the March quarter, Daryanani predicts Apple will reach revenue of $55.4 billion and $2.14 earnings per share. He believes Apple will be bolstered by stronger than expected sales of the iPhone, in addition to the gross margin upside.
For fiscal year 2015, Daryanani has forecast sales of $227.1 billion and $8.70 earnings per share, which is slightly higher than Wall Street's overall expectations at $226 billion and $8.63.
RBC has maintained its "outperform" rating for AAPL stock, and its new price target of $142 is up slightly from its previous projection of $140.
Apple announced this week that it will announce the earnings from its March quarter on Monday, April 27.
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5 Comments
I remember when the ADHD analysts predicted doom for AAPL. Last year.
[quote name="Suddenly Newton" url="/t/185488/predicting-better-than-expected-margins-rbc-ups-apple-price-target-to-142#post_2701306"]I remember when the ADHD analysts predicted doom for AAPL. Last year.[/quote] They've run out of companies to promote as an alternative. :lol:
This seems like a relatively reasonable price target. Maybe a little high, but not bad.
[quote name="sog35" url="/t/185488/predicting-better-than-expected-margins-rbc-ups-apple-price-target-to-142/0_100#post_2701348"][QUOTE name="Benjamin Frost" url="/t/185488/predicting-better-than-expected-margins-rbc-ups-apple-price-target-to-142#post_2701339"] This seems like a relatively reasonable price target. Maybe a little high, but not bad.[/QUOTE] maybe not. maybe. maybe not. All depends on earnings growth and watch sales. IMO I see 20%+ earnings growth the next 2 quarters and strong watch sales. If that happens we see $150 this year. [/quote] That sounds reasonable. China is a worry. Ominous signs in their general market.