While hardly any analysts or traders expect Apple to report blockbuster earnings today on the back of slowing smartphone sales, challenging iPhone 7 adoption, rising competition in China, and generally a loss of Apple’s trademark creative spark under the “new management” which is far more interested in stock buybacks and M&A, few are as skeptical as JPM’s Rod Hall who, following last week’s downgrade by Barclays, came this close to losing his faith in the world’s largest company (he still has an Overweight rating… of course).
This is what he said to expect in today’s AAPL earnings:
Expecting a weak iPhone unit guide with variability from ASPs, FX and Airpods
We believe guidance for FQ2 to March is likely to be lower than many expect on weaker iPhone unit volume. ASPs could partially offset this but the negative FX impact is probably enough to make the two effects a wash. Airpods, however, could add a little kick as the tiny things are nearly impossible to find with leadtimes at 6 weeks globally. At the current share price we doubt Apple deals with short term hiccups well.
Having said that we believe the stock remains a strong value opportunity assuming the board will eventually pay a higher dividend. We also buy into the consensus view that the iPhone cycle should be better this year.
This post was published at Zero Hedge on Jan 31, 2017.